Have we hit the bottom of the slump?

Canada’s cooling housing market may have some people re-thinking their desire to buy. Despite dropping sales, prices are holding up. Nationally, Canada’s housing market closed-out 2012 with a 17% decline in sales in December, but a 1.6% increase in the average price.

More than half a year has passed since the last round of mortgage rule changes by the federal government and trends are starting to emerge. Year-end reports from the real estate industry and CMHC project a slower market for 2013.

But bank economists are now saying the slump has pretty much hit bottom and the effects of the changes have been priced in.

And there has been one significant change since all of the end-of-the-year prognostication: the Bank of Canada has reversed its stance on interest rates. After months of warning that rates will be going up the Bank now says economic conditions mean increases are not imminent.

This change has the potential to halt the slide in the housing market and will likely re-establish some stability, at least for the rest of 2013.