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Canada's real estate market is showing signs of increased activity, according to Robert Hogue, an assistant chief economist at RBC. Despite this, Hogue predicts that the recovery will be gradual until interest rates begin to decrease. He anticipates the Bank of Canada to initiate interest rate cuts starting in June, with a total reduction of 200 basis points by 2025. Hogue believes that these rate cuts will stimulate more activity in the housing market, particularly as buyers respond to improved affordability.

Hogue's observations are supported by recent real estate data, which showed a decline in home resale figures across Canada between January and February. Despite this setback, Calgary's real estate market experienced a significant increase in home sales compared to pre-pandemic levels, serving as an outlier in the broader trend. Hogue attributes the subdued market conditions to the pandemic-induced loss of affordability, which continues to affect buyers' purchasing power.

Looking ahead, Hogue predicts a potential standoff between buyers and sellers in the coming months. Sellers, who postponed listing their homes in the fall due to softer demand, may now be more inclined to enter the market during the spring. However, buyers are facing challenges such as high interest rates and poor affordability, limiting their ability to negotiate. This standoff between supply and demand could further shape the trajectory of Canada's real estate market as it navigates through the implications of changing interest rates and economic conditions.

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