Canada's Housing Demand Suppressed by Economic Recession Fears

Canada's housing market is facing a significant downturn as economic recession concerns weigh on potential homebuyers. A recent BMO survey reveals that 73% of would - be purchasers are adopting a wait - and - see attitude due to fears of an economic slump, a 13 - percentage - point increase compared to March. Deloitte forecasts that the Canadian economy may enter a recession in the second quarter, with a contraction of 0.9% - 1.1% for the whole year. The uncertainty of the trade war has exacerbated market panic, causing the Canadian Real Estate Association (CREA) to sharply lower its 2025 housing price forecast to 688,000 Canadian dollars, a decrease of 30,000 Canadian dollars from the initial prediction. Meanwhile, the annual sales growth rate projection has been halved from 8.9% to 0.2%.

Despite the central bank having cut interest rates seven times in a row to 2.75%, 38% of homebuyers are still waiting for the interest rate to drop below 3% before entering the market. Currently, the lowest five - year fixed - rate mortgage stands at 3.74%. However, 56% of the respondents believe that the right time to buy a house has been missed, and half of them think that it is more difficult to purchase a property than last year. BMO economist Kavcic points out that the trade shock has inflicted lasting psychological trauma, and the housing market's recovery will require a long - term process. High housing costs, which 72% of the people are worried about, and interest rate pressures continue to dampen market vitality, dimming the prospects of a soft economic landing.