GRI recently hosted Robert Kavcic (Senior Economics and Director at BMO Capital Markets) for an in-depth discussion on the outlook of the Canadian housing market. Robert observed the recent stabilization of the market following a correction phase and significant monetary easing. He offered a cautious perspective, noting that the market will take time to reach its peak levels in early 2022. 

Robert reviewed Canada’s economic forecast, projecting a 2% growth rate for 2025, which could be negatively impacted by potential U.S. trade tariffs. He pointed out that the Bank of Canada (BoC) has successfully lowered inflation to approximately 2%, shifting its focus from inflation control to fostering economic growth. He anticipated further monetary easing by the BoC, with three 25-basis point rate cuts expected in 2025. 

Addressing the job market, Kavcic highlighted a rise in unemployment rates compared to previous years. He noted that while strong job creation at the end of 2024 was significant, it struggled to match the labour supply from immigration. However, he emphasized that this unemployment increase does not stem from job losses, and therefore, should not negatively impact the housing market. 

Robert also discussed the pressures robust immigration is placing on housing supplies. He mentioned that capped non-permanent resident inflows are helping to moderate rent increases. Nonetheless, investor withdrawal poses a challenge, potentially leading to reduced housing starts through 2025 and 2026, which may contradict federal housing production goals. 

In conclusion, Robert predicted modest increases in sales and housing prices for 2025, with potential mortgage rates dipping below 4%. He also foresaw continued affordability challenges, selective investor activity, and possible rent declines in many major markets.