Canadian Consumer Confidence & Housing Market Insights – January 2025

📊 Canadian Consumer Confidence & Housing Market Insights – January 2025

As we kick off 2025, a lot is happening in Canada’s economic and real estate landscape. Consumer confidence has seen a noticeable decline, raising questions about the strength of the labor market, mortgage trends, and future real estate activity. Let’s break down the latest data and what it could mean for you.

🔎 Is Canada Facing a “Vibecession”?

The term "vibecession" refers to a decline in consumer sentiment, even if economic fundamentals aren't fully collapsing. Over the past six weeks, Canadian consumer confidence has dipped sharply:

• Concerns about the Economy: Weekly Nanos polling shows that jobs and the economy are now the #1 concern for Canadians, reaching levels not seen since the early days of the pandemic.
• Personal Financial Worries: A growing number of respondents feel their financial situation is worse than a year ago, with pessimism at its highest in nearly five years.
• Economic Deterioration Expected: The proportion of Canadians anticipating economic decline is rising fast—comparable to the panic during the Bank of Canada’s aggressive rate hikes in mid-2022.

🏦 Mortgage Debt & Lending Trends

Mortgage Growth:
Mortgage debt is climbing at the fastest pace since the Bank of Canada began its rate-hike cycle. October alone saw outstanding mortgage balances rise by 0.43%—a significant jump since mid-2022.

HELOC (Home Equity Line of Credit) Balances:
HELOC lending has also surged, with a 0.7% monthly increase—the biggest spike since 2012. This could point to:

1. Big-Ticket Purchases: Canadians are tapping into home equity for renovations, vehicles, or vacation properties.
2. Financial Strain: Others may be borrowing to make ends meet, signaling broader economic challenges.

💸 What’s Happening with Mortgage Rates?

While the Bank of Canada recently cut its policy rate by 50 basis points, fixed and variable mortgage rates haven’t budged significantly.

• 5-Year Fixed Rates: Discounts were minimal after the cut, leaving many rates still higher than they were in September.
• Variable Rates: While slightly lower, they remain above fixed rates in many cases, making affordability a continued challenge.
• Expected Policy Rate Path: Analysts predict the Bank of Canada could cut rates further, with projections showing a drop below 2% by mid-2025.

🏠 Housing Market Impact

1. Mortgage Payments: Despite the recent rate cut, affordability is still stretched. The average monthly payment for a typical home in Vancouver is $2,820—down from its September 2023 peak but still 75% higher than in 2021.
2. Household Debt: Canadians remain some of the most indebted globally, with household debt-to-GDP ratios well above the G20 average. High borrowing costs could exacerbate financial strain unless rates drop significantly.
3. Real Estate Sentiment: Consumer confidence in the housing market has fallen, with many buyers taking a "wait-and-see" approach as rates and inventory levels shift.

🌐 Key Takeaways for Buyers, Sellers, and Investors

• For Buyers: Keep an eye on mortgage trends and start budgeting for future rate cuts. Lower HELOC rates could present an opportunity to renovate or upgrade.
• For Sellers: With consumer sentiment low, positioning your property well in the market will be critical. Now is the time to ensure your home stands out.
• For Investors: This could be the perfect moment to identify undervalued properties. As rates drop and consumer confidence eventually recovers, the market will likely rebound.

📞 Let’s Strategize Together

This year is shaping up to be a dynamic one for the real estate market, with opportunities for those ready to make informed moves. Whether you’re buying, selling, or investing, let’s connect to discuss your goals and create a winning strategy.

🔹 Book your discovery call here: bit.ly/Book_Your_Discovery_Call_Here_
🔹 Search Vancouver properties here: kylemark.ca/listing

Here’s to navigating the 2025 real estate market with confidence and success!