The latest home sales performance reports covering BC and Alberta hinted that the “cyclical bottom” has been reached in those provinces, according to Dominion Lending Centres chief economist Sherry Cooper.
CREA statistics showed that sales gains were especially apparent in the largest markets including the Greater Vancouver area, while “encouraging bursts of activity” were observed in Victoria, Calgary, and Edmonton.
Resale volume grew by 24% month-over-month in Vancouver. During the same time frame, Victoria enjoyed a 10% gain, while Calgary had 6.6% growth.
“These are early signs that the cyclical bottom has been reached in that region of the country,” Cooper wrote in her analysis.
“Market conditions are still soft, though. Property values remain under downward pressure for now with the MLS Home Price Index down from a year ago in May.” The Index fell by 8.9% in Vancouver, 4.3% in Calgary, and 3.7% in Edmonton.
“That said, the rate of decline moderated in Calgary and Edmonton, which is a further sign that these markets are stabilizing,” Cooper added.
This stability is feeding into the Canadian economy, which is now enjoying much better prospects for both the near-future and the medium-term.
According to Statistics Canada, household spending rose by an annualized 3.5% during the first quarter of the year.
Domestic business demand also enjoyed its first gain (3.4% annualized) in three quarters. Non-residential investment had an even more notable 13.5% annualized increase, its largest since 2010.
“The Bank of Canada is counting on a rebound in economic activity in the current quarter and believes growth will accelerate further in Q4 and 2020. That should keep the Bank on the sidelines for some time,” Cooper explained. “Currently, the markets are expecting the Federal Reserve to cut interest rates in July and to continue to do so in 2020.”
“It is unlikely that the Bank of Canada will follow the Fed unless the trade war with China worsens. Political pressure is mounting on the [Trump] administration to reduce trade tensions. Trade uncertainty is the only thing right now that would derail the Canadian recovery.”