Canadian Real Estate Bears Are Back, Fall Won’t Be Pleasant: BMO

Canadian real estate markets are preparing for another raid, said one of the country’s largest banks. BMO warns the early data for September markets generally shows loosening conditions. Markets like Toronto, which usually have scarce supply, are now flush with the most inventory since 2010. Markets are only expected to get more loose in the coming months, as higher yields push mortgage rates even higher. 

Greater Toronto Real Estate Saw The Most Inventory Since 2010

Canada’s largest real estate market showed less than stellar performance. Greater Toronto home sales showed an annual decline of 7% for September. At the same time, new listings ripped 44% higher, effectively creating a market where supply is rising while demand is falling, loosening conditions. The bank warns the number of active listings was the most for September since 2010. 

These conditions are being observed broadly across the country, and mortgage rates aren’t going to help. 

Canadian Mortgage Rates Expected To Continue Rising

Some sighed in relief as the Bank of Canada (BoC) hit pause again, expecting a repeat of January. Not likely to be the case this time around, and it may be good news for buyers.

“Since the spring, the lowest available mortgage rate is up 150- 200 bps,” explains Robert Kavcic, senior economist at BMO. “… With sales still struggling under the weight of high (and going even higher) mortgage rates, the market balance has swung back in favor of buyers again after a brief firming of conditions through the spring.”  

The Rest of Ontario Is Doing Worse, Calgary Still Strong

Not all regions report sales at the beginning of the month, so we’ll have to wait until mid-month for the data. However, Kavcic’s preliminary data was less than optimistic, and he sees it getting worse in the near-term. “It’s not shaping up to be a pleasant fall/winter period in the GTA market,” he explained. 

“Note that other regions look a bit different. The rest of Ontario is probably seeing even soggier conditions than the core of the GTA; within the GTA, condo-market conditions look much looser than for single-detached; and a few other markets in Canada, namely Calgary, are still tight.”