Cheaper financing and talk of the end of rate hikes improved markets across the country. Canadian Real Estate Association (CREA) data shows rising home sales in December. Diving into the data revealed a much more mixed picture though, with perceived improvements masking further erosion from last year. The conditions have economists at BMO warning investors these improvements aren’t enough to halt price declines, at least in the near-term.
Canadian Real Estate Markets Tightened, But Worse Than Last Year
Canadian real estate sales improved on a relative short-term basis—but remain weak. December’s seasonally adjusted home sales were 8.7% higher than a month before. Actual, unadjusted sales were a more modest 3.7% higher. An improvement, but not much of one—especially considering that last year was incredibly slow.
A similar picture was seen when it came to inventory. December saw seasonally adjusted new listings fall 5.1% from November. Actual, unadjusted new listings were 5.8% higher than the same month last year. Once again, the picture of month-to-month activity shows a relative tightening, but the market loosened from the same month last year.
Canadian Real Estate Improvements Not Enough To End Falling Prices
There’s a mix of reads on what this actually means, and timeline context means a lot. Generally, it was interpreted as a firming of the market by most experts. Prices reacted more like one would expect from the unadjusted data points—a sentiment reflected by BMO in their client research note this afternoon.
“The mild re-tightening in the market last month was not enough to stabilize prices, at least not yet,” explained Douglas Porter, chief economist at BMO.
He points to the CREA MLS HPI Index, a.k.a. The benchmark price of a typical home. Stressing that it adjusts for both quality and sales composition, the benchmark price fell another 0.8% in December. It marks the fourth consecutive drop, and prices are now down 13% from the record high reached in February 2022.
Social media may be filled with an ambitious outlook, but the industry isn’t so sure. BMO points out that CREA’s latest forecast showed tempered expectations. The bank agrees.
“Our official call is for sales to be roughly flat in volume terms this year, and for the HPI to dip another 4% on average (after a 5.9% drop in 2023),” warns Porter.
Though not without a caveat, adding “…but the sudden drop in long-term rates suggests the risks to those calls are to the high side.”
“A potential stirring in the housing market may be one of the key reasons the Bank of Canada is doggedly sticking with a hawkish narrative, concerned that a quick turn in housing could inflame smoldering inflation pressures.”
All your old articles that were fear based and not subtance and fact based are going to be proven wrong.
Stop scaring people with your fake news
you sound scared.
He does sound scared
Please don’t say hurtful things, its against the rules 🙁
Hey David, Please don’t say that, its against the rules.
I agree
Do you not notice that this website is on average 3 -5 days ahead of what the regular media reports on the same topics with the same data driven perspective. Better Dwelling is data driven.
😂
You sound over-leveraged…
The authors of these articles are simply presenting the data (and expert/informed takes on such data, based on historical precedent).
You sound scared.
Why the BUT in this headline and story?
“Canadian Real Estate Markets Improved, But Prices Are Still Falling”.
Except for fools who bought in the last few years, falling prices ARE an improvement.
No recession in the US. No rate drops until then as their economy does not need more inflation/srimmy. GLHF BoC.
Smart money is sitting on the side. Anyone buying/selling now are either forced to or money laundering.
Actually hope based. If this train keeps running down the crazy housing investment track the middle class will eventually implode.
Why would anyone want prices to go up?
Houses in Canada have increased in price by 380 percent since the year 2000. Our wages have increased by just 20% during the same time. We have the highest household debt in the G7. Seriously, this housing bubble needs to pop or the younger generations will never be able to afford housing or to have families. It’s a joke.
Canadians use their home as an tax free income generation. Canada has some of the highest tax rates in the world. However any appreciation on your “principal residence”when sold is 100% tax free. Our government has incentivized us to keep flipping our homes, and I know many people that sell their principal residences 2 or more times per year, just keep speculating and moving and the income is generally more than you can make at your full time job. A doctor friend of mine flipped 4 homes in the past 2 years, and made 1.5mm TAX FREE, he doesn’t make that much after tax as a doctor in the same time period. Why work, just keep moving, this works as long as prices keep rising, but when values fall, and mortgage payments are double, then yes the bubble will burst. But 2 million new immigrants over since the beginning of the pandemic have arrived and now it’s bigger demand, and not enough supply so the game continues on. In Canada. No need to work, just keep moving and you can make millions, TAX FREE! Thanks Justin.
I for one believe most of the so called facts and data from these analysts are compromised. Just look at the DAVOS scam and the brainwashing from the top who send out plans to control the world. Mr. Schwab and his gang of elites are bad news for all of us!
See Javier Milei’s comments as he addresses or I should say dresses down those over bloated monsters. Or take it right from Damon Imani who dors not mince his words. We are in big big trouble. Tears for Fears, welcome to your life. There’s no turning back. Even while we sleep. We will find you. Turn your back on Mother Nature. Everybody wants to rule the world. And so it goes people we need to all Stand up to the world bullies that sit in their big chairs at Davos making solutions to steal your life, property,freedom,individualism and put all in a state of anxiety and constant fear.