What’s next for Canada’s housing market?
Rate-hike risk remains the key swing factor for buyers
Porter said even a modest shift in the rate outlook could be enough to dent buyer sentiment, regardless of how far rates have fallen since the Bank’s benchmark rate sat at 5% a couple of years back.
“I always say every basis point matters to somebody,” he said. “So I do think the signal of higher rates would weigh on confidence. And the reality too is it would at least dent sales. My very mild optimism on housing is based on the assumption that the Bank does not raise rates.”
Fed shift under Warsh could add a cross-border wrinkle
South of the border, new Federal Reserve chair Kevin Warsh has struck a hawkish tone since taking over the role, doubling down on a plan to quell what he’s described as an inflation “tax” on Americans.
That could signal rate hikes ahead in the US, something that may prove a worrying development for Canada’s housing outlook.
“On balance, insofar as the Fed is a bit more hawkish or tougher than what many expected – if that’s true, it does put a little bit of pressure on the Bank of Canada,” Porter said. “Not a lot, but it puts a little bit of pressure because it can weigh on the Canadian dollar if there’s too much separation between the US and Canada.
