Canada re-elected a Liberal government on what appears to be a primarily Conservative platform of top priorities
The Two Minute Market Update is intended to keep readers apprised of what’s going on in local real estate markets and in the global financial markets that affect real estate via inflation, interest rates, capital flows and public policy. It is best suited for those not able to keep up with all the news every day, but still wanting to be informed.
Two Minute Market Update, May 8th, 2025
Listing counts continue to balloon in North and West Vancouver, but prices remain sticky in most segments. There appears to be enough buyers seeking properties to absorb enough of the inventory increases to avoid large price cuts. But properties that are priced attractively, where we would have seen multiple offers and sold prices over asking in past years, may not achieve the same result in this market. It will be interesting to see if listing counts continue to expand through the spring and into the summer. I am also looking toward the eventual completion of a few more new construction projects where presale buyers may be distressed to learn current values are less than their contracted sale price. This is already driving down price/sqft rates on higher end condos, making the rest of the market look expensive in comparison.
Probabilities have decreased for both Bank of Canada and Fed rate cuts at their next meetings, as inflation readings from tariffs are expected to show up first on the April and May inflation reports before those decisions are made. Attention is now focused on the circus of trade negotiations happening on a daily basis between the US and its major trading partners. Canada re-elected a Liberal government on what appears to be a primarily Conservative platform of top priorities. The question remains, will they govern as such with many of the same MPs and ministers who long opposed natural resource economy expansion, tax cuts, interprovincial trade protections, etc? If they are to be believed, a wave of spending and investment could both stoke inflation and economic activity from investments in large infrastructure projects.
Bond markets are taking note of the sudden shift away from “degrowth” mentalities and fixations on “net zero” and other demand-side repression (in housing, for example). These were deflationary concepts and their reversal may eventually push inflation risks to the upside. So despite negative growth readings in the US and expected “significant contraction” in Canada for Q2, interest rates are heading in the other direction. Mortgage brokers report that the recent availability of sub 4% rates on 5yr fixed mortgages have mostly disappeared. Broad expectations continue to be for further cuts from both central banks in 2025, making variable rates cheaper.
Stock markets have rallied strongly off their lows, the S&P 500 gaining over 15%. Having set the markets up for expectations of international trade and geopolitical chaos, there is now plenty of room to the upside for further gains. Optimism abounds for productive talks with China, Mexico, Canada, the EU, Japan and others. If these talks don’t come with results quickly, markets will reflect their disapproval. It should be noted that rallies as strong and persistent as this tend to occur during larger bear markets. The reality of the supply-chain shock that was delivered to the economy may also be revealed through company earnings reports and economic data. Continued volatility and sideways price action is the most likely outcome. Attempting to trade markets like this are fraught with peril.
Bitcoin is attempting to break out of a two week consolidation in the mid-$90,000 range. Gold’s strength has persisted and looks poised to continue hitting new highs. The relative strength of both bitcoin and gold compared to more industrial metals like copper, silver and nickel is indicative of the monetary roles both are playing. With talk of actively realigning or rebuilding the global economy, it should be no surprise that investors are flocking toward neutral reserve assets that are not tied to any one country. Oil has dipped back below $60, reflecting expected economic weakness globally.
Matthew Stiles
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Disclaimer: The information provided in this column is for general informational purposes only and does not constitute financial, investment, or other professional advice. While I strive to provide accurate and up-to-date information, I make no warranties or representations as to its accuracy, completeness, or reliability. Any actions taken based on this information are at your own risk. Always consult with a qualified financial advisor before making any investment decisions.