After a period of slow activity, the Canadian real estate market is beginning to see a pickup in home resales in certain areas, according to a new report from the Royal Bank of Canada (RBC). This shift suggests a potential turning point, driven partly by easing trade tensions, although volatility and regional differences persist.
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Key Takeaways:
- Home resales increased in May in select Canadian markets like Toronto, Ottawa, Calgary, Edmonton, Fraser Valley, Saskatoon, and Regina.
- De-escalation of parts of the U.S. trade war is cited as a major factor improving buyer confidence.
- Markets in Quebec continue to perform strongly, bucking national trends.
- Vancouver and some Southern Ontario markets still face challenges with slower sales and downward price pressure.
- Conditions remain favorable for buyers, while sellers need realistic expectations.
What’s Driving the Pickup?
The RBC report released on Monday highlighted that several local real estate boards saw home resales increase in May. A significant factor contributing to this modest revival is the de-escalation of some aspects of the U.S. trade dispute with Canada.
According to RBC economist Robert Hogue, the reduction in trade tensions has “alleviated some of the worst fears about the potential economic fallout,” which had previously impacted buyer confidence. While recent steel and aluminum tariffs still pose risks, the overall trade picture looks less daunting than before.
Penelope Graham, a mortgage expert at Ratehub.ca, echoed this sentiment, noting that while tariffs had affected confidence, the improving trade scenario is creating “cracks of hope.” This cautious optimism appears to be translating, albeit in small increments, into the housing market.
Markets Showing Strength
The RBC report specifically identified several markets where activity picked up in May: Toronto, Ottawa, Calgary, Edmonton, Fraser Valley, Saskatoon, and Regina.
Toronto’s Bounce Back
Toronto, where the trade war was noted to have “paralyzed” the housing market previously, saw home resales increase by 8.4 per cent from April to May. However, despite the uptick in sales volume, home prices in Toronto remain lower, down 4.5 per cent compared to the same time last year.
Western Canada Activity
Beyond the Fraser Valley’s inclusion in the pickup list, Calgary and Edmonton also experienced increased housing activity. Robert Hogue suggested the trade war’s cooling effect on Calgary demand might have been “limited — or even short-lived,” with activity rising eight per cent month-over-month in Calgary.
Quebec’s Unique Trend
Markets in Quebec, particularly Greater Montreal, have been consistently performing better than national averages. Royal LePage spokesperson Anne-Elise Cugliari Allegritti noted that Montreal, Quebec City, and other smaller markets in the province “really stand out this year.” Median prices for single-family homes in Montreal were up 8.6 per cent year-over-year in May, with condo apartments seeing a 4.3 per cent increase, indicating sturdy demand in these regions.
Where Markets Remain Slow
While some markets are improving, others continue to struggle. Sellers in certain parts of Ontario and British Columbia face ongoing challenges. Southern Ontario, with its concentration of tariff-affected manufacturing industries, is particularly noted as a difficult market.
Vancouver remains a buyer’s market. The report indicates that sellers are often forced to accept lower bids as potential buyers feel little urgency to purchase. With increasing inventory and prices drifting lower, buyers in Vancouver have time and leverage on their side.
Real estate professionals discussing current Canadian housing market trends.
What This Means for Buyers and Sellers
Despite the reported pickup in sales activity, the overall market conditions in many areas still favor buyers, especially heading into the typically quieter summer months.
For buyers, this environment offers opportunities:
- Higher inventory means more choices.
- There’s increased ability to negotiate prices.
- Lower interest rates can help buyers qualify for larger mortgage amounts.
- In softer markets, buyers have leverage to include conditions like financing or inspection in offers.
“There is an opportunity to buy a property at a lower price, and lower interest rates mean buyers will qualify for larger mortgage amounts,” said Penelope Graham, highlighting the advantages for those looking to enter the market.
For sellers, the market remains challenging in many regions. Setting realistic expectations and pricing properties appropriately for current market conditions is crucial. Working with an experienced local agent who understands comparable sales and effective marketing strategies is highly recommended.
The report suggests that while the summer may remain slow, a more significant pickup in activity could occur in the fall, traditionally a busier season for the housing market.
For more insights on Canadian real estate trends, explore our related articles.
