Housing market ‘recovery’ gets a reality check

Daisy Ratnasari

Drop in sales and surge in new listings suggest too early to sound all clear

Article content

Don’t count on that housing market recovery just yet.

Article content

Hopes for a turnaround after gains in December and January got a dose of reality last week with reports of falling home sales in several major Canadian markets, suggesting it’s too early to sound the ‘all clear.’

“Anyone expecting smooth sailing ahead for the housing market got a reality check in February,” said Robert Hogue, an economist with Royal Bank of Canada in a report Friday.

Advertisement 2

Article content

Declines in February partly reversed the gains of the previous two months — a reminder, Hogue says, that “very challenging affordability conditions” are still holding buyers back.

Sellers, however, did return. Hogue estimates that new listings rose between 3 and 14 per cent from the month before in Vancouver, the Fraser Valley, Edmonton, Hamilton and Montreal.

“We suspect sellers who took a pass in the fall may have taken an early jump on the upcoming spring market, warmed by news of busier activity in December and January,” he said.

The wider inventory though failed to entice buyers.

Sales in Toronto, Canada’s biggest market, fell 12 per cent from the month before, reversing half the gains seen in the previous two months.

“This up-and-down pattern could be a sign of things to come, as interest rate uncertainty and poor affordability keep buyers and sellers on their toes for the next while,” said Hogue.

Vancouver home sales are now “historically soft” at 23 per cent below the 10-year average.

“We don’t expect this softness to ease quickly. Affording the purchase of a home is extremely difficult in Vancouver and will continue to be a major constraint for buyers,” said Hogue.

Article content

Advertisement 3

Article content

Meanwhile, sellers flooded into this market, with new listings jumping 31 per cent after an even bigger increase in January.

Calgary, “the busiest and hottest” market in the country, also slowed in February. RBC estimates that home sales fell 8 per cent month over month, reversing gains in the previous two months.

Still this market is hard to keep down. Home sales are still 60 per cent above pre-pandemic levels, and demand remains strong, thanks to the surge in population.

Calgary home prices over the past year are up the most of the markets RBC tracks, gaining over 10 per cent in February — a trend they expect will continue.

Despite falling sales, other major markets also saw slight gains in prices. The MLS Home Price Index in Toronto and Vancouver rose for the first time in months.

But don’t look for big gains on this front, Hogue cautions. RBC expects prices to stay mainly flat for the near future, and declines are possible if large numbers of sellers, some possibly distressed, continue to enter the market.

“We think a vigorous, sustained recovery won’t take shape until interest rates fall more meaningfully — something we peg for the second half of 2024,” said Hogue.

Advertisement 4

Article content

 Sign up here to get Posthaste delivered straight to your inbox.


February jobs net change chart

Canada’s job numbers for February blasted past expectations Friday, more than doubling forecasts. But before you get too excited, the country’s unemployment rate also ticked up because population growth once again rose faster than job growth.

To keep up with the rising population, the economy would have needed to add 65,000 jobs, not 41,000, said Desjardins principal economist Marc Desormeaux.

Economists say the blockbuster headline hides a weakening labour market, with gains limited to self-employment and the public sector and wage growth cooling.

“Today’s report is certainly impressive at first blush, particularly the towering rise in full-time jobs,” BMO chief economist Douglas Porter said in note. “However, it’s staggeringly clear that the results are flattered by ongoing massive population gains, and the labour market is thus actually gradually cooling.”


  • Statistics Canada will fill in more details on how the economy fared in January this week. The agency is set to release its survey of manufacturing for the month on Thursday followed by wholesale trade numbers on Friday.
  • Earnings: Ballard Power Systems Inc, Oracle Corp

Advertisement 5

Article content


Stock market snapshot, March 11, 2024

Recommended from Editorial


Everyone likes to think they’re getting good value for their money. Ben Graham, the father of value investing, says a value investor wants to buy a stock that is worth $1 for just 50 cents. But finance professor George Athanassakos says finding such stocks is a lot more complicated than it sounds. Get the answer at FP Investing


Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at [email protected] with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

Advertisement 6

Article content


McLister on Mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here 


Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at [email protected].


Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content

Next Post

My off-center window was driving me crazy - my easy interior design hack fakes symmetry, it can even be done in a rental

A HOME decor lover shared an easy trick to make off-center windows look symmetrical. She admitted that the one in her rental home drove her crazy, so she figured out an easy solution. 2 Callie’s off-center window was driving her crazy, so she figured out a way to hide itCredit: […]

You May Like