Canadian Real Estate Buying Opportunity “Still Not There”: BMO

Canadian housing markets are not yet offering a clear opportunity for buyers, warns BMO. In a June research note, the bank pointed out that sales in major centres like Toronto and Vancouver fell even further in May, while available homes on the market continued to pile up.

In May, sales dropped by 13.3% in Toronto and 18.5% in Vancouver compared to the same month last year. These are among the weakest numbers on record for cities that usually lead demand in Canada.

At the same time, the ratio of home sales to new listings has plunged below 40% in both cities. In Toronto, it dropped under 30%—the lowest May figure ever recorded there. When this ratio is low, it means buyers have more homes to choose from, pushing the market in their favour—and typically pulling prices down.

Buyers now have the upper hand, especially since sellers are holding out for higher offers. They're hoping that mortgage rates will drop and attract more purchasers. But without those rate cuts, homes aren’t moving.

Unfortunately for hopeful buyers, mortgage rates haven’t moved in a helpful direction. The Bank of Canada kept its key interest rate steady in early June, which means variable mortgage rates are hovering around 4.25%–4.5%, while the cheapest fixed five‑year rates are roughly 4%.

For a true turning point in the market, BMO says mortgage rates need to fall meaningfully below 4%. Until that happens—likely only if inflation cools significantly—BMO economist Robert Kavcic believes we’re still “not there.” That means a real buying opportunity remains out of reach for now.