Monday Market Minute | Feb 05, 2024

Housing market watches the sidelines — spring could change everything

What Moved

CREA data showed January housing activity remained muted, with sales flat and new listings rising modestly in major markets. The standoff between buyers awaiting rate cuts and sellers resisting price concessions continued. CMHC's January housing starts came in below expectations, signalling builders were cautious despite strong demographic demand from immigration.

Why It Matters

For real estate-focused private market investors, the spring market was the critical test. Immigration-driven demand — Canada added over one million people in 2023 — created structural housing undersupply that rate cuts alone would not solve. Private real estate funds positioned in purpose-built rental and mid-market residential development stood to benefit as the cycle turned.

Signal to Watch

February new listing volumes in Toronto and Vancouver would indicate whether sellers were finally entering the market. A surge in inventory without corresponding sales would pressure prices; tight listings with rate cut expectations would set up a competitive spring.

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