Canadian Real Estate Prices Go Negative For The First Time Since 2009

Canadian Real Estate Prices Go Negative For The First Time Since 2009 - 2

Canadian real estate markets are heading into the busy season with negative price growth. Canadian Real Estate Association (CREA) numbers show an annual decline for the price of a benchmark home in February. The decline for the benchmark is the first since 2009, and the first for the index outside of recession.

Canadian Real Estate Prices Drop For The First Time Since 2009

The price of a typical home in Canada made the first annual decline in almost 10 years, last month. The CREA benchmark fell to $615,300 in February, up 0.3% from the month before. Prices are now down 0.13% lower when compared to the same month last year. This is the first annual decline since 2009, and the only one outside of a recession.

Canadian Real Estate Benchmark Change

The 12 month price in change of a typical home across Canada.

Source: CREA, Better Dwelling.

The annual pace of growth (or lack thereof) is trending lower. The 0.13% decline is small, but lower than the month before. This is the sixth consecutive month of declines, with prices dropping 1.45% over just the past 6 months.

Ontario Real Estate Markets See Biggest Price Gains

The largest annual price gains were all observed in Southern Ontario. Ottawa made the largest gains with a typical home hitting $400,800 in February, up 7.41% from the same month last year. Guelph followed with a typical home reaching $527,300, up 6.84% from last year. Niagara came in third at $393,500, up 6.54% from last year. These markets all trail the national price, and are close to their all-time peak.

Canadian Real Estate Benchmark Price

The price of a typical home in Canada’s largest real estate markets.

Source: CREA, Better Dwelling.

Western Canadian Real Estate Leads Prices Lower

Real estate markets leading the way lower were all located in Western Canada. The typical home in Vancouver fell to $1,016,600 in February, down 6.1% from last year – the largest drop in the country. Regina did slightly better with prices falling to $262,800, down 5.13% from last year. Edmonton fell to $315,700, 4.49% from last year.

Canadian Real Estate Price Change – 1 Year

The 1 year percent change in the price of a typical home, in Canada’s largest markets.

Source: CREA, Better Dwelling.

Only 3 Canadian Real Estate Markets Are At Peak Prices

Just three markets are sitting at peak prices – Ottawa, Niagara, and Montreal. Ottawa is the most expensive at $400,800, up 7.41% from last year and at an all-time high. Niagara followed at $393,500, up 6.54% from last year. Montreal is at $353,400, up 6.24% from last year. That’s it. All of Canada’s other large markets have fallen from peak.

Canadian Real Estate Price Change From Peak

The percent change from peak pricing for a typical home in Canada’s largest markets.

Source: CREA, Better Dwelling.

The majority of markets are off of all-time peaks, but Edmonton, Regina, and Barrie made the biggest drops. Edmonton is down the most with prices hitting $315,700 in February, down 15.54% from peak. Regina prices fell to $262,800, down 14.59% from it’s all-time peak. Barrie is looking at the third biggest drop with prices hitting $458,600, down 13.91% from the all-time high.

Toronto and Vancouver didn’t make the largest movements, but they’re still work calling out. Toronto’s typical home price hit $767,800 in February, down 5.81% from peak pricing for the city. Vancouver fell to $1,016,600, and is down 7.97% from the all-time high.

The first national decline in almost a decade comes at an interesting time. Canadians are loaded with the some of the highest debt levels in history. Regulators are taking a stand to ensure that households don’t max out their credit. Politicians are pushing to loosen lending standards, to help push debt levels higher. All while the busiest time for home buying approaches very quickly.

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  • rustinpeace 5 years ago

    Toronto prices baffle me. I still don’t understand where this money is coming from. Condo’s in particular are defying gravity as are people who are willing to pay $2000+ month to rent. This summer will be the true test as a surge of inventory will hit the market. Let see how much support these prices have with volume

    • SUMSKILLZ 5 years ago

      Part of it is people are forgoing cars. The $600+ a month it costs to have/run a car is now going to rent…well some of that is going to UBER too. At least that is what I hear at work socially.

    • John 5 years ago

      I feel like we said this last year though with B20.

      We’re still missing some sort of economic shock to catalyze a market response. Otherwise we may see prices rise or stay steady.

      We need to see the same chart with April data, since February declines are to be expected.

      • @xelan_gta 5 years ago

        No we don’t need any shocks, it’s just a matter when condo sector peaks and with current $800k benchmark price for new condos it should happen quite soon.
        Detached and 905 markets are still declining so it’s just a matter of time when people start seeing that 416 condos are massively overvalued compared to detached and 905.
        Once condo market peaks investment and FOMO in that sector dries out similarly how it happened in detached/905 sectors.
        Same happened in Vancouver, condo sector peaked around Feb 2018.
        Without FOMO/Speculation/Foreign capital GTA/GV RE markets are dead because clearly people can’t afford those at current price levels.

        • Bernie 5 years ago

          Do you think detached prices will accelerate down, after condos roll over? Are the two things connected at all, or just two separate markets moving without too much tying each other together, specifically in their movements down. I understand how they moved up with detached leading and condos following because of FOMO, I don’t quite see how they interact coming down, besides detached creating a ceiling for condos.

          • John 5 years ago

            The condo market was pulled up by a high ceiling (detached) and available credit during the boom time.

            The condo market continues to grow while detached falls because buyers who used to qualify for a detached now only qualify for condos.

            Once the delta between condos and detached closes people either move up for better value, buy a detached house instead or get priced out.

            Then the floor can fall out as condo sales decrease and buys still remain on the side lines not wanting to catch the metaphorical knife.

          • Bernie 5 years ago

            John, I follow everything you said there and understand those movements. But at the end there what causes detached to fall after condos fall? Illiquidity due to lack of move-up buyers, so sellers must lower prices to move homes? Do I have that right? I’m just wondering where the next break point comes after condos roll.

          • @xelan_gta 5 years ago

            Bernie, the key is price growth expectations. So far people are expecting condo prices to grow which holds the overall market from falling apart. As soon as condo sector peaks those expectations will be gone and sales will tank.
            That will cause the whole market to roll over and start declining in tandem. Check Greater Vancouver, exactly which it’s happening there right now.

  • Casual Observer 5 years ago

    From a DT Toronto perspective, the delta change in borrowing power from the Stress test Rules vs any capital gains on properties have made it very difficult for people who are looking to upsize to move. So they are simply staying put. Some don’t want to move outside of the city as well since most jobs are in the downtown core.

    Properties in the 400-700k area (generally condos) are starting to show very heated competition with multiple offers. However, there is very low inventory in this segment because the existing condo owners don’t qualify for the larger mortgages even after their capital gains are factored in to buy a detached home in the 800k+ ranges in the suburbs. So you see a lot of stagnation in detached homes, especially in the million dollar range in the suburbs.

    Still, there are a lot of new home buyers looking in the lower cost segment, and inventory is simply non existent, especially downtown Toronto. I suspect this is what is driving the increase in demand for rentals, as well as the strength in prices for condos in Toronto.

    If there ever is some sort of catalyst that occurs, rents look like they will continue to go up. This was true in 2008, and will continue to be true as people will need places to live.

  • cupajoe 5 years ago

    Rent is really a lagging indicator. Wait till we get deep in a recession, liquidity continues to tighten, unemployment rises, and people can not afford their mortgages. (renting and/or AirBnb’ing does not cover costs anymore) . Then you get foreclosures, both forced and voluntary, as property valuations fall underwater compared to mortgage costs. After that, rents drop…. and the process reinforces its-self, leading to further price drops. (Expect a bunch a freebies … first month free, free internet, parking, etc.).

    By 2021, things will look dramatically different on the rental market than today. Think of the people who were told to buy in late 2016-2018, with the promise they could flip for a profit in 5 years or at least break even by renting out. Even if they could cover the shortfall, they would have to think about ditching the property.

  • ken 5 years ago

    I owned a few houses in 2008-09 and I kept a pretty close eye on the markets. Yeah, I knew they dumped for a short time, but what this chart shows, as far as I recall, really did not happen in Vancouver.
    2008 was the scare tactic panic flash crash, so the official data was manipulated to reflect this, creating the perfect foundation to show a huge recovery from. But in reality, today’s market is far, far worse.

    • John 5 years ago

      2008 and 2009 house price was crashing. Sales were extremely low as well. It was saved by slashed interest rates.

  • Crose 5 years ago

    Price corrections always start slowly and gather momentum as people/speculators realize the exit door is growing smaller and further away. HOLD ON TO YOU’RE HATS !

  • DB 5 years ago

    You know the sky is going to fall when you find comments from someone obviously linked to RE. ” Analysts no longer predicting gloom and doom” “Barring an economic disaster rate hikes are still expected” ” Stop watching the market daily”
    Yes all of these were mentioned in the same article, go figure… This reporter obviously would prefer an ignorant buyer who buries his head in the sand and doesn’t know squat about making the biggest investment of their lives..

  • Hibbert 5 years ago

    I have been reading Better Dwelling for a while and have found it to be quite informative regarding the larger Canadian housing markets. Please include data for Winnipeg the next time. (Yes, there are some people who actually live in Manitoba, even though you may have seen a few of us during your vacation time in Costa Rica 😁)

  • Zenity 5 years ago

    Toronto prices needs to come down at least 40%. That’s only 3 years gain, current prices will destroy our economy.

  • Depth386 5 years ago

    Fed and BoC already getting right off the hike trail and the show hasn’t even started.

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