The Canadian real estate market is currently experiencing a stalemate between buyers and sellers. Many sellers are holding on to their properties, hoping that the market will bounce back, while buyers are hesitant to invest, unsure if the market has hit its lowest point or will rebound. As a result, predicting the market’s future is challenging, but economists have offered some insights.
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Despite ongoing predictions of a recession in 2023, the Canadian economy has been performing well in the first quarter of the year, with GDP growth of 0.6% in January and a tight labour market with a 5.0% unemployment rate. Canadian employers have also been hiring, adding 383,000 positions since last September. While this is good news for the economy, it may cause concern for the Bank of Canada, which is closely monitoring the economy as it makes decisions regarding its benchmark interest rate.
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Higher borrowing costs may be slowing Canadians’ spending on an individual basis, but real GDP is on the rise due to the country’s growing population. Additionally, strong job numbers tied to immigration may be enough for the Bank of Canada to overlook the tight labour market and strong Q1 economic results.
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Factors boosting the economy include relief from global supply chain disruptions and warmer-than-average temperatures in January, which may have encouraged Canadians to spend more freely. While some economists predict a modest recession in 2023, others believe that the Bank of Canada will continue to hold its conditional pause, given the solid economic data.
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While concerns about a potential housing market crash in Canada persist, it’s essential to consider the unique factors that make the Canadian real estate market distinct from others worldwide. Immigration, for example, plays a significant role in driving demand for homes in Canada, and this demand is expected to remain strong in the years ahead. As such, it’s unlikely that we’ll see a sudden and significant drop in housing prices. While there may be some fluctuations, it’s reasonable to expect the Canadian housing market to continue to experience a smooth landing in the coming years.