Robert Hogue: Latest News

One of Canada’s big banks is calling for the country’s cooling housing market to hit a low point in the spring before fully adjusting to rising interest rates.

interest rates rise and the post-pandemic market starts to materialize.But just how low prices will go depends on what part of the country you’re living in, with a recent report from Desjardins Economic Studies suggesting cities that saw the most growth in the pandemic now have the furthest to fall.Major Canadian housing markets including Toronto and Vancouver saw less sales activity and even price drops in April and May as the Bank of Canada began raising interest rates over the past three months. Bidding war no more — How to make an offer in Canada’s cooling housing market This “chillier wind,” as RBC economist Robert Hogue dubbed it in a report last week, is expected to continue driving home values down from their pandemic-era highs as demand softens and housing inventories are given time to rebuild.Randall Bartlett, senior director of Canadian Economics at Desjardins, tells Global News that rising interest rates are the “pin that’s bursting the housing bubble that developed during the pandemic.”The Desjardins report released this past week predicts that from the peak of national home prices in February of this year to the end of 2023, the average sale price in Canada will drop 15 per cent.Virtually all markets are expected to see some drops, but some could see value erode more rapidly.In the Maritimes, for example, prices in Nova Scotia and New Brunswick are expected to fall 20 per cent over that timeframe.

home prices reach the stratosphere, calls on the government to bring the housing market back to Earth — possibly with a soft landing — are growing increasingly urgent.Some of Canada’s big banks have recently joined the chorus.“Overheated markets threaten to destabilize the economy down the road if or when a correction occurs, with possible heavy costs for governments,” Robert Hogue at RBC Economics has warned in a note to clients.