Canadian real estate is having one of the worst Spring markets on record. Canadian Real Estate Association (CREA) data shows home prices slipped lower in May. Continued weakness is the result of weak demand, which was expected to recover once rates were cut. Unfortunately for sellers, they overestimated how many buyers would appear ahead of rate cuts, with inventory surging to one of the highest levels on record while sales plummeted to one of the lowest.
Canadian Real Estate Prices Are Slipping Lower Once Again
The seasonally adjusted composite benchmark price of a home across Canada.
Source: CREA; Better Dwelling.
Canadian real estate prices slipped lower across the country. The price of a benchmark, or typical, home fell 0.2% to $714,300 in May, about 2.4% lower than the same time last year. Existing home prices over the past 3 years have only advanced 6.2%, averaging a 2.0% compound annual growth rate (CAGR) over the period.
Canadian Real Estate Price Growth
The 12-month change in the seasonally adjusted composite benchmark price of a home across Canada.
Source: CREA; Better Dwelling.
Canadian Home Sales One of The Weakest On Record
Weak demand played a big role in the weak price move. Annual growth of seasonally adjusted existing home sales fell 5.9% in May. It marked one of the weakest Mays on record, comparable to the depths of when the pandemic first kicked off.
Sellers didn’t anticipate the drop—in fact, it appears they anticipated sales would be a lot higher. New listings for sale climbed 13.5% in May, returning to the 10-year average. BMO suggested this is helping to gradually “rebuild” inventory after being so scarce over the past few years.
At the same time, they highlight that some markets have seen a sharp uptick in inventory that far exceeds the national move. For example, Greater Toronto condo inventory has hit an all-time high, according to the bank.
“All told, the resale housing market was subdued across much of the country in May ahead of the first Bank of Canada rate cut of this cycle,” explained Robert Kavcic, senior economist at BMO.
Adding, “The Bank will surely have eyes on how conditions evolve post-cut, but so far there has been little to suggest a significant rebound in activity or prices.”
Real estate investment trusts (“REITs”) must be suffering after promoting endless gains in real estate. However, Real Estate companies have been banging the drum of home price increases regardless of rates of unemployment and unaffordable housing.
The government and the banks need to let the market normalize. Using housing as an investment should be just as high risk as stocks. What’s with this BS that the housing cannot fall because it’s peoples retirement. The market needs to bust and home prices need to come back to a historically normal price (where normal people can afford to buy a home). People need to suffer the losses that go with being greedy in a low interest environment And thinking nothing will ever change.
Well said.
how about f u. some people worked hard to get where they are.
welfare morons like you will always promote this strategy. go to NDP and socialists.
LoL! Some people are sensible and refused to take on million dollar debts.
You didn’t get where you are with your “real estate empire” by hard work, but your willingness to take on unlimited debt to buy into a Ponzi, supported nationally by our corrupt government of landlord-politicians willing to do anything to avoid the popping of the housing bubble.
I’m quite the opposite of NDP/socialist – in a true capitalist society, banks and speculators like you would be left to fail if you made stupid gambles, but instead whaa whaa whaa – you want to be bailed out of your bad investment – privatized gains and socialized losses.
I for one am happy to sit buy and watch all of the real estate parasites struggle, and perhaps even get jobs.
I for one am happy to sit by and watch all of the real estate parasites struggle, and perhaps even get jobs.
just because you are on welfare doesn’t mean everyone else is, some people actually work in their life to get where they are
Lol! Some people, but not you, speculator!!
Marc Miller and Sean Fraser might bring in a million more sucker to prop up this Ponzi scheme called Toronto real estate.
No shid! Lowe your prices!
Canada needs to #lethomepricesfall !