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Yahoo
19-05-2025
- Business
- Yahoo
Capital Economics: BoC poised for deeper rate cuts amid housing, factory weakness
-- Signs show that U.S. tariffs are finally weakening the Canadian economy, increasing the likelihood of Bank of Canada interest rate cuts at an aggressive pace, says Capital Economics. In a Friday report, the research firm pointed to a softening housing market as a main indicator, further reinforced by a decline in manufacturing sales volumes. The housing sector is leading the downturn, with April's MLS Home Price Index falling 1.2% month-on-month, the steepest decline in several months. Annual house price inflation dropped to -3.4%, reinforcing expectations for a 5% annual decline in prices by the end of 2025. Home sales remain soft, with overall transactions flat at 430,000 annualized units and new listings falling 1%, helping to stabilize the sales-to-new listings ratio. Capital Economics points to U.S. auto and steel tariffs, not weather, as the main driver of waning demand, especially among owner-occupiers. Manufacturing is facing its own contraction, as March sales fell by 1.4% in nominal terms and 1.1% in real terms, the sharpest drop since mid-2024. Key subsectors like primary metals and motor vehicles suffered as tariff-driven front-loading of orders in prior months began to reverse. Softer factory activity is now bleeding into the labor market, with manufacturing employment down 30,000 in April. Capital Economics expects this trend to continue as the full impact of U.S. trade measures works its way through domestic production and exports. Consumer price data for April, due on May 20, may offer some relief to policymakers. Headline CPI is forecast to fall by 0.6% on the month, dragging the annual rate to 1.6%, while core trim inflation is expected to tick higher to 2.9% due to stronger goods prices. Retail sales for March, due May 23, are expected to rebound 0.9% after February's 0.4% decline. Lower gasoline prices and resilient demand, in spite of weakened confidence, suggest that households are still supporting modest GDP growth in Q2 2025. Capital Economics forecasts GDP growth to slow to 0.7% annualized in both Q2 and Q3, with full-year growth expected at 1.6% for 2025 before slipping to 1.0% in 2026. 'We think the Bank of Canada will need to lower interest rates more than markets are pricing in,' the firm wrote, projecting a policy rate of 2.00% by year-end, well below current market expectations. Related articles Capital Economics: BoC poised for deeper rate cuts amid housing, factory weakness China urges U.S. to act 'responsibly' after Moody's downgrade 'From Tariff Man to Global Salesman' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Global News
15-05-2025
- Business
- Global News
Canadian real estate market entering a ‘transition period,' says CREA
The latest data suggests Canada's housing market may be showing a sense of calm amid an uncertain trade war, and that things may be starting to slowly pick up. According to the latest report from the Canadian Real Estate Association (CREA), April saw actual home sales fall 9.8 per cent compared to the same period in 2024. 'Actual' in this sense means the data counts the total number of sales recorded in the month. However, on a seasonally-adjusted basis, the report for April showed national home sales were virtually unchanged from March of this year, with a drop of 0.1 per cent. This 'seasonally-adjusted' method of analysis is preferred by most economists because it eliminates seasonal variations and highlights the underlying economic picture. 'Sales have been falling rapidly, really since January 20th, when the tariffs were first announced, we could see it in daily data,' says senior economist Shaun Cathcart at CREA. Story continues below advertisement 'And so as of March, we were 20 per cent down from just November, and that's huge. What stood out in April was that we didn't fall at all, just sort of paused. So in that sense, I guess flat is the new up.' 4:10 Pressure for the Bank of Canada to lower interest rates The report also shows the number of new properties added to the real estate market fell by one per cent in April compared to March, and the MLS Home Price Index (the average listing price) fell 1.2 per cent. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy Compared to 2024, listing prices fell an average of 3.6 per cent across Canada, and the actual sale price was down 3.9 per cent compared to April of last year. 'So sellers are definitely willing to give a little bit, understanding that it's not the same market that it was four years ago, but it's not to the point where prices are in free fall,' says Cathcart. Story continues below advertisement 'It's still a negotiation, and I think people are still coming to a mutually agreed upon result at this point.' 4:55 New cabinet role puts former Vancouver mayor back in the spotlight The outlook for the trade war has many buyers and sellers waiting on the sidelines to see how tariffs will develop, as well as interest rates determined by the Bank of Canada which affects mortgage rates for home buyers. This new data from CREA suggests the real estate market may have already seen the worst of the impacts. 'Right now we're in the transition period between uncertainty and the certainty that this (trade war) is going to be damaging to our economy,' says Cathcart. 'I think that the fear, the risk is if we have massive layoffs, then you'd get a lot of people that have to sell and can't wait and can't negotiate and just have to get rid of that asset. We're not there yet, but certainly that's the risk of this trade war.'
Vancouver Sun
09-05-2025
- Business
- Vancouver Sun
Looking to buy a house in Canada amid trade war? What RBC report is telling us about the real estate market
The ongoing trade war between the U.S. and Canada has cooled Canadian housing markets significantly. Anxiety over tariff uncertainty and a looming threat of recession have led to notable shifts in market activity and home prices across the country, according to a recently released special report on housing from RBC . Home resales have dropped sharply, with March 2025 marking the third consecutive monthly decline. Nationally, resales were down an estimated 4 per cent from February and 15 per cent from December. In major markets like Toronto, resales in March were the lowest since 1998, dropping more than 30 per cent since the U.S. began its trade overhaul. In Vancouver, home resales have fallen 23 per cent year-to-date, says RBC. The trade war has made potential buyers more reluctant due to concern about job security and the broader economy. Many are choosing to wait out the uncertainty, rather than make the significant financial commitment to buy a home. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. Buyer uncertainty met with increased listings Despite that shift, new listings have increased . Toronto's listings are up 8.1 per cent, while sales in that market have dropped 23.3 per cent. This imbalance has led to increasing inventory and more competition among sellers. This has shifted bargaining power to buyers , putting downward pressure on prices. In Toronto, the composite MLS Home Price Index fell by $35,000 (-3.2 per cent) over three months, with further declines expected. Vancouver's benchmark price has also slipped for three straight months and is now 0.6 per cent below its level from a year ago. Nationally, prices are expected to continue softening, especially in Ontario and British Columbia, according to BNN Bloomberg . Downturn worse in trade-sensitive markets The regions in Canada most vulnerable to the trade war's effects on housing are those with economies heavily tied to cross-border trade, especially sectors targeted by U.S. tariffs. The impact is most pronounced in southern Ontario, such as the cities of Toronto, Hamilton, Kitchener-Waterloo, Cambridge, Windsor, Brantford, Guelph, St. Catharines and Niagara Falls. The economies of these cities are deeply integrated with the U.S. via the automotive, steel, and manufacturing industries. The most intense retreats in housing activity and prices have been there, with Toronto experiencing its weakest sales in decades and other cities like Hamilton and Kitchener-Waterloo seeing notable price declines and surging inventories. Market drops across the country As Canada's least affordable market, Vancouver is highly sensitive to economic reverberations. The trade war has led to a significant drop in home resales (down 23 per cent year-to-date) and falling prices, with buyers gaining bargaining power due to increased supply. Calgary is a major energy and beef exporter, making it highly exposed to U.S. tariffs on these commodities. The city has seen a significant rise in listings and a drop in sales, with prices flattening and market balance shifting as a result of weaker demand. Saint John is particularly vulnerable due to its dependence on crude oil exports, primarily from the Irving Oil Refinery. Tariffs on energy exports could have a severe local economic impact, translating into weaker housing demand. The Quebec cities of Saguenay, Trois-Rivières, Drummondville are major exporters of aluminum and forestry products, both targeted by U.S. tariffs. Any slowdown in these industries could reduce jobs and housing demand. Job security confidence falling Confidence in job security in Canada has dropped to its lowest level since the early pandemic, with only 44.9 per cent of Canadians expressing confidence in their job stability as of April 2025. Nearly 30% are unsure about their job security, a sharp increase in just two months. This uncertainty is causing many would-be buyers to hesitate or postpone major financial commitments like home purchases. According to a recent BMO survey , 74% of Canadians are concerned about a possible recession, and only 14 per cent of those planning to buy a home intending to do so in 2025, with many deferring to 2026 or later. More than half feel homeownership is less attainable than a year ago, and two-thirds are less confident they will ever own a home. Private sector workers are more affected by job security concerns than public sector employees, who generally feel more secure and may be more willing to buy homes. Newcomers and renters, facing higher perceived risks of job loss, are particularly likely to delay or forgo home purchases. Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Edmonton Journal
09-05-2025
- Business
- Edmonton Journal
Looking to buy a house in Canada amid trade war? What RBC report is telling us about the real estate market
Article content The trade war has made potential buyers more reluctant due to concern about job security and the broader economy. Many are choosing to wait out the uncertainty, rather than make the significant financial commitment to buy a home. Buyer uncertainty met with increased listings Despite that shift, new listings have increased. Toronto's listings are up 8.1 per cent, while sales in that market have dropped 23.3 per cent. This imbalance has led to increasing inventory and more competition among sellers. This has shifted bargaining power to buyers, putting downward pressure on prices. In Toronto, the composite MLS Home Price Index fell by $35,000 (-3.2 per cent) over three months, with further declines expected. Vancouver's benchmark price has also slipped for three straight months and is now 0.6 per cent below its level from a year ago. Nationally, prices are expected to continue softening, especially in Ontario and British Columbia, according to BNN Bloomberg.
Global News
08-05-2025
- Business
- Global News
Canada's housing market is ‘cracking' under Trump's trade war: report
Canada's housing market is 'cracking' under the weight of U.S. President Donald Trump's trade war, with housing resales down in markets across the country, a new report said. The Royal Bank of Canada report looked at the data from the MLS Home Price Index, which is essentially the median price of a house in a market. The sharpest pullback in people getting into the housing markets has been in southern Ontario and British Columbia, RBC economist Robert Hogue said. The pressure from Trump's trade war is keeping buyers from making a big financial commitment, such as buying a house. 'The trade war is taking an increasing toll on Canada's housing markets as potential economic fallout weighs heavily on the minds of prospective homebuyers,' Hogue said in his report. Home prices have been falling and inventories rising as houses go unsold in Vancouver, B.C.'s Fraser Valley and Toronto, putting buyers in the driver's seat. Other Ontario markets that saw property values decline are Hamilton, Kitchener-Waterloo and Cambridge. Story continues below advertisement Even previously hot markets are cooling down quickly. Calgary, for example, saw annual home prices decline for the first time in five years. 'Prairie markets such as Edmonton, Saskatoon, Regina, and some in Quebec, including Quebec City, and the Atlantic region like St. John's seem to be holding up at this point. But they aren't immune to trade-induced anxiety,' Hogue said in his report. While buyers are pulling back, people wanting to sell their property continue to trickle steadily into the market. For example, the number of new listings in Toronto rose by 8.1 per cent but the number of houses being resold plummeted by 23.3 per cent. Hogue said Toronto's housing market was in a 'downturn.' 'Sales transactions in April were the weakest in 30 years (outside the 2020 COVID-19 lockdown) —making it the second-straight month of exceptionally soft activity,' he said. The figures were even starker in Calgary, which saw new listings rise by 15.7 per cent but sales dropped by 22.3 per cent. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy The largest drop in home sales came in the Fraser Valley real estate market, with new sales declining by 29.1 per cent. However, the report noted that there were some signs of stabilization in at least one market. Home resales in Montreal have largely stabilized, down 0.2 per cent since falling nearly 12 per cent in the first two months of the year. Story continues below advertisement 4:28 House hunting amid economic uncertainty What's keeping buyers out? Experts say what's keeping buyers out is fear of getting hit by Trump's trade war. 'The buyer hesitation we're currently seeing is largely psychological,' Penelope Graham, mortgage expert at said. 'Prospective home buyers are fearful that their livelihoods will be affected, and are wary of committing to large financial decisions, such as taking on a mortgage. This is despite some of the most affordable market conditions we've seen in some time, as both mortgage rates and home prices have softened this year.' Story continues below advertisement Trump's trade war is 'clogging the market's arteries,' said Clay Jarvis, mortgage expert at NerdWallet Canada. He said it's not just the housing market; even commercial real estate is taking a hit. 'You don't necessarily want to be expanding your portfolio of rental properties if you think the job market's going to tank,' he said. 'The cost of living is also a huge factor. If people are struggling to cope with their day-to-day living expenses, or leaning on debt in order to do so, they're probably not in a position to afford a mortgage.' 5:32 Real estate: Spring outlook and 2025 home trends What can buyers and sellers do? For someone looking to buy a house this summer, there are benefits to be had, Jarvis said. Story continues below advertisement 'If you have job security and access to a significant down payment, it's not a bad time to be looking for a home. Mortgage rates are approachable, and inventory is building in most markets, which should translate to less competition and more room for negotiation,' he said. Homebuyers can avoid the dreaded bidding wars and insist on having inspections before they commit to a property, given the high inventory in the market, Graham said. 'Those who are serious about buying should seek out a pre-approval and a rate hold as soon as possible, to secure access to today's mortgage pricing. In today's economic climate, market sentiment – and the factors that influence mortgage rates – can turn on a dime.' For sellers, however, the market is a lot tougher. 'With a buildup of inventory in the market, it's not a competitive time to sell your home. If the timing can't be avoided, however, it's important to have realistic expectations in terms of pricing; the heady record-breaking sales of the pandemic years are in the rearview,' she said.
