Posthaste: Why Canada's housing market could rebound sooner than many expect

financialpost.com:

Canada’s housing market is nearing a “tipping point” and its recovery will start sooner than many expect, says a new report by one of Canada’s leading real estate companies.

“I believe the narrative suggesting that the housing market will rebound only when the Bank of Canada lowers rates misses the mark,” said Phil Soper, chief executive of Royal LePage said in the report released today.

“The recovery will begin when consumers have confidence the home they buy today will not be worth less tomorrow. We see that tipping point occurring in the first quarter, before the highly anticipated easing of the Bank of Canada’s key lending rate.”

National home prices slipped 1.7 per cent lower in the fourth quarter of 2023, showing that higher borrowing costs were still weighing on the market, said the report. Since the market’s peak in the first quarter of 2022, home prices have fallen 7.9 per cent.

However, they still remain well above their pre-pandemic levels. In the fourth quarter, prices were 18.7 per cent higher than in the same period in 2020 and 22 per cent higher than in 2019.

Overall economic conditions are good, said the report. Unemployment among the working-age population is low, savings levels are higher than normal and mortgage delinquency is at historic lows.

“We believe many who need housing have the capacity to enter the market, they simply lack the confidence to transact,” Soper said.

Inventories have increased as sales dropped this past year, but remain below historic norms, the report said. In the fourth quarter there were four months’ of inventory available in Canada, more than the two months during the housing boom, but less than between five and six months available in 2018 and the first half of 2019.

“The