Canada’s credit-crazy real estate buyers have flooded the market once again. Canadian Real Estate Association (CREA) data shows a benchmark, or typical, home rose in March 2023. Breaking the data down by market, most saw substantial increases. One market even saw prices rip over $40k higher over a span of just 31 days.
Canadian Real Estate Prices Are Falling In Just 1 In 5 Markets
We already discussed the national price climbing last week, and most regions are seeing growth. Only 12 of the 61 benchmark home price indexes didn’t see growth in March. Of those, one showed no movement (Guelph), and the other 11 reflected losses. Higher rates went from throttling every major market to just 1 in 5 benchmark indexes showing falling home prices.
About half of the markets posting a decline were located in the province of Ontario. Not a total surprise, considering it was running extremely hot over the past few years. Kingston showed the largest decline when it came to the rate and dollar value, with a typical home falling 2.9% (-$15,800) in March.
Canadian Home Prices Rose In 80% of Major Real Estate Markets
The other 4 in 5 market indexes showed substantial growth. The fastest rising rates were in Sudbury (+5.6%), North Bay (+5.1%), and Maurice (+4.7%)—in that order. The first two are located in Ontario, and the last is in Eastern Quebec. We had to look it up, but with monthly prices rising over $10k in a month—it might just be us.
A Small City In Ontario Is Seeing Exuberant Growth
When it comes to dollar terms, the most expensive markets continue to top the list. The largest dollar growth was observed in Oakville, where prices climbed 3.3% (+$42,300) in March. Greater Toronto followed with a 2.5% (+$27,200) increase. A little more surprising is Sudbury was in third, logging 5.6% (+$22,300) growth. A typical home in Oakville is more than 3x that of Sudbury, so the dollar increase of nearly half is really a spectacle to behold. It’s a lot of capital sinking into a distant university town.
Canadian real estate prices are generally moving higher, with just a few exceptions. Affordability issues don’t seem to be slowing down price growth, and that’s likely due to the type of buyer. Investors began dominating as the country flooded the market with cheap money and moral hazard. Investors were buying at such a scale that even bank executives warned they had displaced end-users.
Rising interest rates helped to throttle investors from scooping up everything. However, less than a year later the country is demonstrating it doesn’t have much else. Borrowing costs are retreating and new demand-stimulus has been delivered by the policymakers.
Home sales have yet to recover, but adding another layer of moral hazard is likely emboldening investors once again.