Monday Market Minute | Jul 01, 2024

Mid-year housing check — the recovery is real but uneven

What Moved

CREA's mid-year data confirmed the Canadian housing recovery was underway, with national sales up 9% year-over-year through June. Toronto and Vancouver led the upturn, driven by low-density homes in established neighbourhoods. However, the recovery was uneven: condo markets remained soft with elevated inventory, and Prairie markets showed modest gains at best. The BoC's June cut had provided a psychological boost, even if the rate impact was minimal.

Why It Matters

For private real estate investors, the uneven recovery created selective opportunities. Purpose-built rental development in supply-constrained markets was the strongest thesis. Condo pre-sales, however, warranted caution — investor-heavy buildings in Toronto's core faced absorption challenges. Understanding the sub-market dynamics was essential for avoiding the trap of assuming a monolithic housing recovery.

Signal to Watch

The BoC's July 24 decision was the next catalyst. A consecutive cut to 4.50% would accelerate the housing recovery and could push fall market activity well above seasonal norms — a critical data point for residential development underwriting.

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