Home Construction Still at a Standstill, and Consumer Price Index Drops

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Housing Market Registers a Pulse

After flatlining earlier in the year, Canada’s housing market is showing some signs of life, albeit more of a finger twitch than a resurrection. According to CREA, home sales increased 3.7% in June compared to May, but remained 9.4% below June of 2023. Inventory also edged up, increasing 1.5% over May, largely driven by new listings in the GTA and B.C.’s Lower Mainland. Prices, meanwhile, increased by a measly 0.1% since May, and are down 3.4% compared to last June. While the market is moving slowly, CREA expects the second half of the year to be somewhat livelier. 

Construction at a Standstill in Canada’s Biggest Cities

If Canada plans to build its way out of the housing crisis, it will be in a crisis mode for a long time. That’s because last month saw yet another decrease in new home construction, which dropped 9% in June, according to the Canadian Mortgage and Housing Corporation, despite a modest dip in interest rates. The biggest stops in housing starts were in the country’s most competitive markets, with new home construction down 60% in Toronto and 55% in Vancouver compared to last year, largely due to slowdowns in condo construction. Montreal, meanwhile, experiences a 226% increase in housing starts.

Canada’s Relationship with Inflation Back on Track

After flirting with lower interest rates for months — and eventually shooting their shot with a modest .25% drop in June — the Bank of Canada may finally be ready to commit to a long-term relationship with lower borrowing costs. That’s because the Consumer Price Index dropped to 2.7%, after last month’s 2.9% gain, an unexpected increase from April’s 2.7% reading. According to Statistics Canada, the latest decrease is largely thanks to lower gas prices. Now that inflation is on its way down again, experts say a happily ever after is “all but guaranteed” for next week’s interest rate announcement.

The Spring that Never Sprung

Despite hopes of a last-minute surge, June’s modest interest rate cut had little effect on the housing market, capping off a historically slow spring. According to Royal LePage Canada’s second-quarter report, sales figures were dragged down by Vancouver and Toronto, where buyers remain on the sidelines. According to the report, however, 51% of prospective buyers are looking to jump back into the market when interest rates drop, hinting at a potentially busy end to the year. As a result, Royal LePage is maintaining its 9% prices increase forecast for 2024, despite a less than 2% jump thus far. 

Where Traffic Problems Are Becoming Housing Market Problems 

Traffic congestion is not only driving Torontonians crazy, but it may also be driving them out of town. According to a new Ipsos poll conducted by the Toronto Region Board of Trade, roughly 85% of GTHA residents agree that the region is facing a congestion crisis, that traffic is causing serious problems for their family, and that it’s negatively impacting the local economy. In fact, more than half of those surveyed say they are considering leaving the region because of congestion. While most blame excessive construction and mismanagement, nearly half accept heavy traffic as a reality of big city life.

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