Canadian Real Estate Prices Fell An Average of $1k Per Day Last Month

Few would believe it just a few weeks ago, but Canadian real estate is falling as fast as it climbed. Canadian Real Estate Association (CREA) data shows benchmark prices fell in June. The benchmark, a typical home, actually declined by an average of nearly $1,000 per day last month. Almost all 2022 gains have been rolled back, but it would still take months at this pace to reverse the recent boom. 

Canadian Real Estate Prices Fell $29,000 In June

Canadian real estate prices are cratering fast after the speculative mindset was broken. Canada’s benchmark home price fell to $809,700 in June. It’s a decline of 3.5% (-$29,400) for the month, but still 14.9% ($105,000) higher than last year. These sound like large drops but home prices increased so fast it’s only beginning to make a dent. 

Canadian Real Estate Price Growth Is Still High, But Slowing Fast

Home prices are cooling very rapidly at the national level. The monthly decline of $29,400 is the largest recorded in the CREA HPI, and likely the largest ever. Annual growth is still double digits, which is huge. It’s also half the level seen just four months ago, showing rapid deceleration. 

Canadian Home Prices Nearly Reversed 2022 Gains

Canadian home prices are down significantly from peak, but aren’t in a correction. The benchmark price peaked in March and is now 6.7% (-$58,400) from that point. Home prices have to drop more than 10% for a correction, but large numbers are tough for most to appreciate. It would take another 8 months at this rate to reverse gains made since the 2020 rate cuts. 

The year started with absurdly large growth that made it hard to see any price declines for many. That’s changing fast. Last month, we projected home prices were on target to reverse 2022 gains by the end of August. That assumed the losses didn’t accelerate, which they currently are.

At the current rate, 2022 gains can be lost by the end of this month, a month faster. But once again, it’s still a long way from reversing all of the value inflated by monetary policy. Oh, you heard price gains were due to supply? The global central bank organization, the BIS, disagrees — they attribute the global home price boom to monetary policy missteps.  

This week’s rate hike is expected to put a further dent in high home prices. BMO Capital Markets sent clients a note this morning, calling the hike a knock-out. Based on their calculations, a significant correction would need to happen to support a level of activity seen in last year’s tight market. As more inventory comes to market, the correction becomes more significant.

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  • Ron Bruce 3 months ago

    Banks must be concerned that large mortgage holders or those in HELCO loan programs will default on their payments. Banks need to lower interest rates in their customers’ savings accounts and charge more on every service to offset losses. Fueling (aka gas lighting) runaway home prices were never the Bank’s problem. They were in a position to make more money and played the game – readjusting and deflecting is the Bank’s MO.

  • Gerald Haw 3 months ago

    Needs to drop this month for 2 years if Canada isn’t going to be a housing ponzi scheme and pretend it’s a real country.

  • Omar 3 months ago

    Board padded stats. Toronto-area markets have listings that are $200k+ and the sales cover more than 40% of the national volume.

    • Erik M 3 months ago

      Some stats from ITSO, which covers some 20 real estate boards in Ontario. To add some more context.

      February Median $875k
      June Median $715k

      February Active Listings – 4,698
      June Active Listings – 17,797

      February Sales – 7,138
      June Sales – 6,557

      The trajectory is clear, inventory and interest rate changes double whammy. Expect more declines if we get our traditional fall inventory bump and the BOC continues at this pace of interest rate hikes.

      If this rate of decline continues we could see medians in the mid $500’s by the end of the year. Wiping out basically all gains from 2020. 🤔

      • Erik M 3 months ago

        Here is TRREB, similar picture.

        February Median $1,075k
        June Median $890k

        Sales to New Listings
        Feb 13,359 / 20,152
        June 9,347 / 26,068

        July as of Today 3,064 Sales, 10,297 new listings. On pace to be one of the slowest July Sales numbers going back 10 years which is as far as I can go.

  • Yoroshiku 3 months ago

    “The global central bank organization, the BIS, disagrees — they attribute the global home price boom to monetary policy missteps.”

    Missteps seems like far too mild a term for what the central banks did.

    • Credit Guy 3 months ago

      Sure, but Dan had to delete his twitter because quoting the an economist was “too extreme” and conspiracies about him being a Chinese communist started to rise. So he’s going to use more diplomatic tone understandbly. I’ve noticed he’s even softening the bank’s statements now and people still call him a doom and gloom journalist. Sometimes there’s just doom to write about, Boomers.

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