Recession fears put Canadians’ homebuying plans on hold, says BMO survey

Though interest rates are significantly lower than they were this time last year, 38 per cent of Canadians looking to buy a home said they are waiting for rates to drop below three per cent or even lower, the survey found. Photo by Gavin Young/Postmedia files

Article content

Article content

Article content

Nearly three-quarters of people considering buying a home have adopted a “wait-and-see approach,” up from 60 per cent in March, indicating fears of an economic downturn are having an effect, the survey said.

Article content

Article content

“Canada’s housing market remained under pressure heading into the spring, with sales and prices both weakening further,” Robert Kavcic, senior economist at BMO Capital Markets, said in a release. “There is some clear underlying weakness as inventory builds and investors remain absent. Suffice it to say, homebuyers are losing confidence and motivation, especially in areas of B.C. and Southern Ontario.”

Article content

Article content

Ipsos Canada surveyed 2,500 people from March 3 to 26 for BMO’s annual look at Canadians’ personal finances and financial progress, but then asked some follow-up questions in April due to the dramatic economic shift as Donald Trump unleashed his tariff war.

Article content

After showing some first tentative signs of a pickup at the end of last year, Canada’s housing market has significantly slumped as homebuyers’ dreams were delayed due to the fallout from Trump’s tariffs.

Article content

Article content

Article content

CREA also predicted the national average home price will fall 0.3 per cent on an annual basis to $687,898 in 2025, a drop of $30,000 compared with January’s forecast.

Article content

Article content

Canadians’ recession fears are not unfounded.

Article content

Article content

Deloitte Canada’s economic outlook released last week called for a recession to start in the second quarter of this year, with growth contracting by 1.1 per cent and then by 0.9 per cent in the third quarter due to significant trade uncertainties.

Article content

Canadians should be prepared for “really soft economic activity over the next six to eight months,” Dawn Desjardins, chief economist at Deloitte Canada, said.

Article content

That dynamic reared up in other areas of BMO’s survey.

Article content

For example, 82 per cent said the “fear of the unknown” was their leading source of financial anxiety, while 81 per cent said they harboured worries about their overall financial situation and 72 per cent cited housing costs as a concern.

Article content

In April 2024, elevated interest rates posed the greatest barrier to people jumping into the housing market, with 72 per cent of homebuyers saying they were waiting for the Bank of Canada to lower rates. Back then, policymakers were months away from launching a rate-cutting regime that resulted in seven consecutive trims to bring rates to 2.75 per cent from five per cent.