Canadian real estate prices are starting to take a breather, after an epic run. Canadian Real Estate Association (CREA) numbers show prices across the country were down a few points in December. The vast majority of markets are now off all-time highs, with only two printing records in December.
Canadian Real Estate Prices Are Down 2.28% From Peak
Canadian real estate prices fell in December, but remain positive over the past 12 months. The benchmark price of a home across Canada hit $616,700 in December, down 0.34% from the month before. This represents a 1.63% increase compared to the same month last year, and is down 2.28% from peak. The decelerating growth is worth taking a mental snapshot of.
Canadian Real Estate Benchmark Change
The 12 month price in change of a typical home across Canada.
Source: CREA, Better Dwelling.
Two of Canada’s Most Expensive Real Estate Markets Are Suburbs
Canada’s most expensive real estate markets are Vancouver, Oakville, and Fraser Valley – in that order. Vancouver’s typical home price fell to $1,032,400 in December, down 2.69% from last year. Oakville, a Toronto suburb, saw the price of a typical home hit $941,500, up 3.32% from last year. Fraser Valley was the third most expensive at $834,700, up 2.52% from last year. Yes, two of those markets were suburbs of major cities.
Canadian Real Estate Benchmark Price
The price of a typical home in Canada’s largest real estate markets.
Source: CREA, Better Dwelling.
The most affordable markets are in Eastern Canada, and the Prairies. Moncton had the lowest typical home price at $180,300 in December, up 2.47% from last year. Regina home prices fell to $267,400, down 5.22% from last year. Saskatoon fell to $289,600, down 1.24% from last year. Most affordable isn’t translating into a good investment in this case. All three markets underperformed the national average over the past 5 years.
Ontario Real Estate Prices Are The Biggest Gainers
Ontario real estate markets were the biggest gainers last month. Ottawa printed the largest gain with a typical home price hitting $394,700 in December, up 6.88% from the same month last year. Guelph was in second with prices reaching $524,100, up 6.77% from last year. Niagara was in third at $391,800, also up 6.77% from last year.
Canadian Real Estate Price Change – 1 Year
The 1 year percent change in the price of a typical home, in Canada’s largest markets.
Source: CREA, Better Dwelling.
Western Canadian real estate led the way lower. Regina’s benchmark price of $267,400 in December was 5.22% lower than last year, the biggest drop of any major market. Next was Calgary with a benchmark of $413,900, down 3.16% from last year. In third was Vancouver’s benchmark of $1,032,400, down 2.69% from last year.
Only 2 Canadian Real Estate Markets Are At Peak Prices
The days of pushing new highs every month is over in most of Canada, with only Ottawa and Montreal sitting at peak. Ottawa’s benchmark price of $394,700 in December is an all-time high for the region. Montreal’s benchmark is $348,700, also an all-time high for the region. Both markets seem to be booming, but they aren’t if you take a longer perspective. Over the past 5 years, both markets grew at half the pace of the national average.
Canadian Real Estate Price Change From Peak
The percent change from peak pricing for a typical home in Canada’s largest markets.
Source: CREA, Better Dwelling.
Far from peak and resting in correction territory are Edmonton, Regina, and Barrie – in that order. Edmonton’s benchmark price was $319,200 in December, down 14.61% from the peak reached in June 2007. Regina’s benchmark hit $267,400, down 13.1% from the peak reached in July 2012. Barrie, another Toronto suburb, reached $466,000, down 12.52% from the peak hit in April 2017.
Toronto and Vancouver real estate prices both made very similar drops from peak. The benchmark in Toronto reached $764,200 in December, down 6.26% from the peak hit in May 2017. Vancouver real estate reached $1,032,400 in December, down 6.54% from the peak hit in June 2018.
There’s some year-over-year comparison distortion, first noted by a big six analyst. Prices across Canada made an abrupt decline in December 2017. This lead most of the market to appear like it’s printing much larger gains one year later. However, we just didn’t make as big of a taper this year. That’s why it’s important to look at both the annual price movement, as well as peak performance.
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Before a Realtor that only skimmed their textbook comes in and says “but it’s December, they always fall,” CREA seasonally adjusts these numbers. The benchmark is actually factoring prices from the summer, to soften the drop.
The problem I continue to have with every mention of Toronto real estate is that it encompasses way to large of an area. If you look south of the 401, East of 427 and West of the DVP, most properties are still commanding very high prices with multiple offers, usually selling within a week. However, when you look to North Etobicoke, Misssisauga, Scarborough and North York, you see a different picture. Then when you move further beyond these boundaries the picture gets much more bleak.
As the population continues to grow, I think the demand to live in the city where you can cycle/walk/bus for work and play will only increase. Take a drive on the 401 (How i would define Hell) and you can begin to see why.
The questions I ask is this: If Canadians continue to migrate to Toronto from other cities and our immigration numbers stand, how are prices in Toronto proper going to see a significant decline without an severe economic recession?
It’s very simple, if Toronto proper holds ~2million people it certainly does not have 2 million households making 200k to support current housing costs.
This is not Monaco, some tiny town where the working class cycles to from a neighboring town 10min away.
The average house needs to cost what the average household income in that city can support.
Or are rich bankers going to buy properties on Oakwood and Eglinton? Do we have ~2mil rich folks in the city?
Lets say we do…who will support all of this? Do you think some guy making 15$ an hour will commute for 2 hours to serve some coffee?
Rich bankers? Did you miss the hidden gem last week? Even they’re renters now.
“Evan Siddall is everyone’s favorite renter/former Goldman Sachs exec, that happens to be the CEO of the CMHC.”
https://betterdwelling.com/canadas-national-housing-agency-ceo-stress-tests-are-better-than-losing-your-home/
I agree with your points, I just think it may take a very long time for prices to adjust – if they ever do.
A rich guy isn’t going to buy a place at oakwood and eglinton – you’re right. They are going to buy in Moore Park, Leaside, North Toronto etc. These are the areas that see continued demand.
Much of the housing stock in corso italia, oakwood village etc. has been occupied by the same residents for many many years (20,30,40+). Many were new immigrants and have since paid off their mortgages. They are comfortable in their neighbourhoods and will probably die in their homes. Sure, when they go up for sale unrenovated for $650k-$1mm the prices can seem a bit absurd, but people (dual income middle class) can afford it and that is where they’re choosing to buy to stay in the city.
Existing homeowners who might want to move aren’t , due to all the transactional costs (land transfer, realtor etc.) and are choosing to renovate. This in turn improves the neighbourhoods even further while continuing to keep the inventory low.
Inventory continues to stay low and i’m sure this has a lot to do with the people not trading up.
How do we get an inventory spike to bring the prices down?
Here are my comments:
1. “People can afford it” – I do not believe this is true. People are stretched to the brim with historically low interest rates. This cannot continue forever without an implosion of the Canadian dollar.
2. People do not trade up because no one can afford the floor of the market anymore. Without first time buyers, there is no way for anyone to trade up.
3. As the market seizes, prices will start to slide (as they appear to be for some market segments). No one will want to catch the falling knife that is real estate, and inventory will continue to build. This is the exact opposite of what inflated prices in the first place.
Happy to hear others’ thoughts.
Does anybody know anything about plans to create massive mobile home communities in the EX burbs of the GTA? This would certainly have a rebalancing effect on high rents and exorbitant condominium prices.
No it wouldn’t. It would create a new overpriced floor of even smaller, even sh!tt!er homes for people to ‘live’ in while protecting the currently inflated market.
While the concept might be ‘cool’ at first. You’re essentially proposing the construction of trailer parks. But worse.
Everyone needs to put this idea into the shredder box ASAP.
The land is too valuable deep, deep into the countryside. Why build a trailer park or “tiny home” community (https://www.hgtv.com/shows/tiny-house-big-living ) when you can build million dollar homes? Even if a town/region allowed it, the math does not make sense. Then there is that pesky global warming and extreme weather problem…
Jimmy my boy, its very simple. Those areas all inflated because it was relatively cheaper and more affordable than buying a similar property in Toronto proper. Toronto prices skyrocketed, the gap between Toronto prices and those regions grew massively. People were willing to move out there to save. Those prices inflated as a result, the gap shrunk, now people prefer to live in Toronto proper again. If those prices continue to fall, then the gap grows, people will be willing to commute more to save. If you live close to a Go station, the commute to the downtown core is shorter and easier than say living at college and ossington, where you have to take a few streetcars and transfer to the ram packed subway line.
Whats funny, up until april of 2017, the narrative to justify SFH price gains both within Toronto proper and the surrounding areas was that we have a land shortage and people would be willing to drive for 2 hours (both ways ) every day to land that elusive detached home. Once those prices started to correct, the new narrative is that everyone just wants to live in the downtown core where they can work and play………….
That is exactly my point. I never wanted to and never will live in the burbs. I agree with your logic on why those prices are inflated and will continue to decline.
My whole rant is in regards to city living within the boundaries i’ve described above.
I like to read both bearish and bullish scenarios for “toronto” real estate but the bearish all seems to relate to the burbs (richmond hill, aurora, Mississauga, Oshawa etc.). The relentless bearish outlook also seems to come from people that do not live in Toronto proper/grown up in it and aren’t observing what those that have/are seeing.
No but my point is that core cannot hold up if the surrounding areas fall. If pickering drops by 20%, than those looking to buy in scarborough would move just a little bit further east to save unless scarborough prices also fell. Once scarboroughh prices fall, then those looking to live in the beaches would be willing to live a little bit further east to save. This will work its way to the core until the sheeple realize that they have have committed 500k (before interest) to 25 years of debt servitude for 500 sqr feet of construction materials in the sky.
And for the record, I have always live in Toronto proper……. Owned a detached in the 416. Now renting a condo in leslieville. I could see myself going to a place like KW in the future.
And that’s the rub…20-30 years ago when TO was nothing, no one even considered investing in transit and proper urban infrastructure. Fast forward and our economic engine is basically crippled by such poor transit and accessibility it takes as long to just get around the city as it does to get in and out. Having lived there for 10 years unless you’re in the core it is a nightmare. I lived in east York for 5 years and to get to king and Bathurst, if everything was working, took 50 minutes. Getting in and out to see friends and family was horrific and even just buzzing around town. Don lands station has NO accessibility despite a commitment to have every statin updated by 2020(I believe)…they are nowhere close. Also, the culture there is getting very New York in the 90s and is losing touch with what makes it so awesome. This is a rant, I’ve been flying since 4am. Nice to see you’re still around Grizz. Tock. BD4L.
Just been lurking in the shadows Blue, still a daily reader. Hope all is well my friend
Toronto is down 22% since peak 2017
http://www.chpc.biz/plunge-o-meter.html#PhotoSwipe1547825630824
That’s single family home averages, not the whole market. Condos are technically at all-time highs, although more than 50% of them are being sold for 5% below all-time highs. The board’s frankenstats make that hard to decipher though.
Yeah because people would prefer boxes in the sky to land. Once condos cross housing floor, like that silly rosedale condo post yesterday, it all flips. And there is inventory coming. And amateur landlords are getting pooches. And Airbnb is about to be cracked down on. All the ‘fundamentals’ behind condos are all unicorn farts. But what do I know. I live in the country shooting shit and watching the stars. Tock. BD4L.
Any harshness not intended…running on fumes.
I’d like to see where Winnipeg stacks up in comparison. Why is it excluded when SK has 2 cities represented?
TammyK,
I think it’s because Winnipeg doesn’t meet the threshold for homes sold to count in the numbers.
Not totally positive, but Winnipeg is weird with all of real estate. The board doesn’t do benchmarks, only “averages” which are totally useless. They also aren’t in the Teranet index, which I think has to do with their land registry blocking access, but I’m not positive. As much as the rest of Canada doesn’t have a transparent market, Winnipeg takes the cake for opacity.
Let’s just leave the box closed and just assume the cat is dead. We’re they going to shut down MB and just cut Canada’s loses along with Newfoundland? Just kidding, I loves me some newfs. Tock. BD4L.
Teranet HPI has stats for Winnipeg. It’s also down.
https://housepriceindex.ca/2019/01/december2018/
You have Barrie and Guelph listed as amoungst the largest markets in Canada, but leave out Halifax, Quebec City, and Winnepeg which are all many times larger?
Maybe stats aren’t your cup of tea…
🤦♂️ That’s because Halifax, Quebec, and Winnipeg don’t have benchmark prices, they only do averages. Averages are useless, since they don’t tell you anything about a market, especially when buying shifts from one type of unit to the next.
If you’re going to be arrogant, at least have some clue what you’re talking about. The arrogance of Canadians that offer nothing never fails to amaze me.
Suburbs like Barrie are also more statistically significant than places like Halifax as well. An economic suburbs with the same amount of sales as a whole region with the same amount of sales provides much more useful analysis for the impact in major economic regions.
Sounds painful to the rest of the country, but regions outside of Toronto, Vancouver, Montreal, and Calgary have very little relevance to the rest of the economy. That’s almost 80% of the country’s GDP. Halifax and Quebec City offer very little in regards to contributing to understanding the impact to the macro market.
If u miss to buy now plz don’t regret later
Edmonton is the epitome of a soft landing…
Prices drift 15% lower over 12 years, since peaking 2007 – no collapse or crash.
After bubbling up 180% in the 12 years prior from 1995 to 2007 when average prices went from $150K to 2007 $425K
There was a year in Edmonton when prices vaulted 50% (think 2006) ! Toronto or Vancouver, have never seen that kind of 1 year price more.
Markets don’t have to Crash, yes some do – others don’t
it’s called a time correction.