No news is good news, especially for real estate investors looking for markets to stabilize. BMO Capital Markets dived into existing home resale data, and found little movement in July. Inventory is outpacing sales but they believe stocks are largely just being replenished. Toronto condos are a notable exception, where they are starting to see a supply glut. Considering Toronto real estate led Canada’s markets on the way up, it’s worth paying attention to see if it leads on the way down.
Canadian Real Estate Sales Climb But Remains Weaker Than 2019
Canadian real estate sales might be slower than usual, but they’re stable. Home sales saw annual growth of 4.8% in July, which initially sounds like solid growth. Unfortunately, the month is compared to a historically weak period. The lender caveats by noting that sales are improving, but still remain 5% below the 2019 average and remain subdued. A little progress is better than no progress.
Source: BMO
Canadian Real Estate Listings Are Still Rising Faster Than Sales
Inventory is climbing much faster than those subdued sales, easing market pressure. New listings climbed 12.7% over the same period, leaving them 7% above 2019 levels. Only a handful of markets have failed to see inventory improve, easing those tight conditions seen post-2020 rate cut.
“This combination is allowing inventory to gradually build, but not saturate the market,” explains Robert Kavcic, senior economist at BMO Capital Markets.
Canadian Real Estate Is Largely Balanced, Toronto Is A Big Exception
Canadian real estate sellers haven’t budged much on price, despite the slowing conditions. The price of a benchmark home is only 4.2% lower than last year, which is a substantial discount—except when contrasted with the record gains made post-2020 rate cut. Prices have effectively moved sideways for the past few months, with sellers holding on to see if rate cuts stimulate demand.
The average market being balanced doesn’t mean that all markets are balanced. A few exceptions remain, including a region that historically leads the national market.
“There are some pockets (i.e., TO condos) where the market is more saturated, but for Canada overall, the market is almost perfectly stable,” explains Kavcic.
Toronto home prices slipped but not all that much considering the eroding fundamentals. Those include rising residential vacancies, record office vacancies, a surge in overleveraged condo investors, and a multi-year high for mortgage delinquencies.
Canada hasn’t seen any other market erode quite like Toronto has recently. That may mean it’s an isolated issue, but it may not. Toronto real estate led the national market on the way up, and created affordability issues for its professionals. As a result, young adults fleeing (and the investors chasing them) helped to bid up prices across the country. Those premiums paid were often justified solely with the logic that it was cheaper than Toronto.
That presents an important question—if Toronto slows, can other markets retain stronger demand and price premiums?
Why is every article on this site about Toronto condos? I don’t care about them.
Because Toronto condos are like 20% of all real estate value traded in Canada. A couple new buildings going up have equivalent value to the monthly trade volume in some existing home markets.
Could also be because you’re reading an article on a bank’s analysis of the most important market to the financial system. Plenty of other sites to read, I’m sure they won’t miss if go to CBC for a less Toronto and Vancouver centric site, since those are the two markets they cover.
So funny. That’s exactly what’s happening in Halifax—people from Toronto buying homes, and only living here part time. They can’t own in their city, so they’re still keeping an apartment there and paying pretty much anything to get a home.
Big expansion of gov employees in the CRA around the Maritimes but the pay isn’t close to what’s needed to reasonably buy around here.
The housing market may be stable, unemployment and the economy, not so good.
Surprised Vancouver is holding up so well. Narrative can conquer all.
Trudeau will use the carbon tax proceeds to support condo owners. Canada’s very soul depends on real estate prices increasing
I know you think that’s a joke but look at the Federal Infrastructure banks loans. Canada is literally borrowing from public debt markets to help make condos more profitable (note this doesn’t lower price, since giving a handful of developers a subsidy doesn’t change the general market position.
This statement by BMO is just fluff. The banks are trying to defend the current status. Condos are falling fast true. But they are the canary in the Coal Mine. Real estate markets from Calgary to Halifax are affected by purchasers from The Toronto area. Toronto sales of Condos and Houses fund a lot of buyers all across Canada . A condo collapse as is happening in Ontario affect house sales particularly in Ontario but also elsewhere. House sales often depend on buyers selling their condo . No condo sales fewer house sales. As for stable a quote from my local paper in Powell River BC, “The average selling price for a single-family home in July 2024 was $617,284, with an average of 93 days on the market. The average selling price in July 2023 was $796,336, with an average of 56 days on the market” A fall of 180,000 in 1 year seems pretty stable to me. Powell river is by no means unusual in having a fall. Its happening all across Canada
Just like the US housing market was stable in 2007, only the subprime mortgages were were a problem.
180k/12mo =15k a month / 500 a day. That’s more than my take home pay before taxes. I would wait the hell out of this market until it turns around the other direction.