“Risk assets” will also stay on a knife edge. The president appears to like it this way, playing both Santa Claus and Grinch in an effort to achieve his objectives.
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, March 25th, 2025
The early returns on the North Shore market for this spring are taking form and we can begin to make some early (if not premature) conclusions. What we can say for sure is that this market is not like the 2015-2017 years or the 2020-2021 years where markets were driven substantially higher by throngs of buyers whose primary concern was “missing out”. Transaction volumes for March do not reflect that sort of activity, even with another week to go. This holds across both North and West Vancouver as well as across property types. While listing numbers are higher than what we have seen for the past few years, they are not piling up at an alarming rate. North Van condos may be the exception here where sales/actives ratio appears to be dropping deep into “balanced” territory. If anything, this market looks closer to that of 2019 – a year that saw prices tread water for the most part. This makes for a relatively good market to both buy and sell properties, as buyers and sellers alike are behaving rationally.
As mortgage rates drift moderately lower after recent central bank cuts, most observers are now looking forward to some large catalysts for guidance about the future of rate direction. For one, a federal election has been called with Liberals and Conservatives in a dead heat (if polls are to be believed). We can expect a steady stream of policy announcements over the next month, many directed toward the housing affordability crisis on the minds of so many young people. We will also be watching for which direction the tariff switch will be flipped next by the Trump administration. Monday’s markets are rallying after reports of tariffs being more targeted than broadly applied to everything. The issue will continue to hang over bond yields which will reflect the resulting inflation expectations from tariffs. “Risk assets” will also stay on a knife edge. The president appears to like it this way, playing both Santa Claus and Grinch in an effort to achieve his objectives.
5 year bond yields have oscillated around the 2.65% (Canada) and 4% (US) range for the past few weeks. This spread of 1.35% could continue to widen based on most analysts’ projections. However, as much as that is being priced into markets, it’s somewhat surprising that the Canadian Dollar has not fallen further already (hovering just under $0.70). There remains some prospect for the opposite to occur if the election outcome can believably resolve some of the competitiveness issues plaguing the economy. A barrage of spending or tax cuts could indeed boost growth rates, bond yields and the Canadian Dollar. Subsequent increases in mortgage rates, however, would not be welcomed by the real estate market. All very speculative, but it’s sometimes worth thinking ahead a few steps.
Stock markets bounced convincingly off their lows of March 13th and have gained back nearly half of their losses. The selloff was mostly a story of the “Magnificent 7” stocks, which accounted for more than 50% of the market’s drawdown. This appears to be another instance of “rotation”, where investors begin looking for leadership in other sectors than big tech. As volatile as it’s been, this is probably constructive for most people with a typical 60/40 portfolio allocation. Ignoring the noise isn’t always easy. But those who are patient have typically been rewarded when the dust settles. There remains plenty of good reasons for a more protracted decline (like valuation) but that’s been the case for a long time.
Bitcoin has also recovered a good amount of its losses as it is currently behaving like one of the “risk on” assets. Volume has been muted indicating that buyers and sellers are awaiting new catalysts to move price one way or another. Gold broke through the $3000 mark and is holding it firmly. The mining stocks have been one of the best performing asset classes of the first quarter. Oil is attempting to reclaim the $70 figure. Much depends on ceasefire agreements (or breakdowns) in the major conflicts that has reduced supply.
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.