Canadian Real Estate Prices Are Back To November 2021, Down Over $100k Since Peak

Canadian real estate prices continued to fall last month, and that was before this month’s super rate hike. Canadian Real Estate Association (CREA) data shows the price of a benchmark composite (i.e. “typical”) home fell in August. Home prices fell for a fifth consecutive month, and the drops aren’t expected to stop anytime soon.   

Canadian Real Estate Prices Fell $22,000 Last Month

Canadian home prices fell sharply once again, continuing to erode massive gains made over the past few months. The price of a typical home fell to $760,400 in August, down 2.80% ($21,900) from a month before. Prices remain 7.05% ($50,100) higher than last year, but at this rate, those gains can disappear quickly.

Canadian Residential Real Estate Benchmark Price

The composite benchmark price of a home across Canada, in dollars.

Source: CREA; Better Dwelling.

Canadian Home Price Growth Is Back To July 2020-Levels

Annual growth for the price of a typical home is tapering fast, and might actually turn negative in the coming months. The annual rate of 7.05% is the lowest growth seen since July 2020, before everyone went on a mad dash for cheap money. Prices are now back to November 2021 levels, meaning without any price growth in the next two months — the trend will likely turn negative.  

Canadian Residential Real Estate Benchmark Price Growth

The 12-month rate of growth for the Canadian composite benchmark prices.

Source: CREA; Better Dwelling.

Prices Are Down Significantly Since Peak 

Canadian home prices have only been falling for a few months, but the decline is substantial. August was the fifth consecutive month that home prices fell, after peaking in March 2022 — when rates began climbing. A composite benchmark home is now down 12.4% ($107,900) from that number. The decline makes it officially a correction, but not quite a crash, which is another 8 points lower. 

Canadian real estate prices got a rapid boost from falling interest rates, and now that trend is reversing. As rates climb, credit capacity to service mortgages falls, reducing the liquidity for homes at higher prices. With experts calling for further rate hikes, including last month’s super hike, the odds are still in favor of further price declines. Though with gains over the past two years and rising prices, these price drops are largely just reversing the unusually large injection of credit that distorted the market in the first place. 



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