Canadian real estate’s brief bounce is beginning to fade. Canadian Real Estate Association (CREA) data shows existing home sales climbed in June, with prices also climbing. However, price growth is notably decelerating at a rapid rate, with new inventory now outpacing sales.
Canadian Real Estate Prices Are Showing Signs Of Fatigue
Canadian real estate prices are still climbing, but showing some signs of fatigue. The composite benchmark, or typical, home price climbed 0.8% (+$5,700) to reach $760,600 in June. Though they remain 4.5% (-$35,700) lower than the same month last year, they’re also the highest since then.
Canadian Real Estate Prices
The price of a typical home across Canada, in Canadian dollars.
Source: CREA; Better Dwelling.
At first glance, that appears to be substantial growth. Most households certainly aren’t seeing a 0.8% increase in their salary in a single month. However, zooming out, we see the smallest monthly increase since January—back when prices made a tiny decline. Home prices are still rising, but it’s certainly not the market seen just a month before.
Canadian Real Estates Remain Significantly Below Peak
The percentage change for the composite benchmark price since peaking in March 2022.
Source: CREA; Better Dwelling.
Comparing 12-month growth can overstate the amount retraced since the correction. Existing homes remain 11.1% (-$95,200) lower than the all-time high reached in March 2022. Peak buyers are still better than the bottom, when prices were 17.6% (-$150,800) lower. If prices continued to increase by $5,700 per month, it would take a little over two years to return to the peak.
Canadian Real Estate Inventory Growth Outpaced Sales
CREA attributes cooling market conditions to moderating sales and loosening inventory. Home sales rose a seasonally adjusted monthly 1.5% in June, while listings climbed 5.9% over the same period. Note that moderating sales doesn’t mean they fell, but are no longer rising at the breakneck speed seen over the past few months (largely due to a base effect).
Inventory outgrowing sales helped to ease market conditions, reflected in the sales to new listings ratio (SNLR). The seasonally adjusted SNLR fell 2.3 points to 63.6% in June, just a few points from returning to a balanced market. Cities like Toronto (54.3% SNLR) notably saw the biggest shift, falling over 12 points in the month, but more on that next week.
Canadian existing home prices are still rising, but the gains are being trimmed as conditions ease. If this continues, the surge in sales may prove to be pent up demand (buyers delayed as prices fell), rather than a return to normal. As interest rates continue to rise, rising inventory is likely to apply more downward pressure on prices.
Articles says prices down but graph show prices up…
*Finally* – Let the games begin. The RE market needs a proper cleansing. I am just concerned the new measures enforced upon banks by the OSFI to help prop up underwater mortgages, pardon fees, interest on interest, extend amortizations to eternity, will not let this fall. Canadian RE is in dire need of a fall. We have a lot to learn from e.g. the EU, where citizens are not dependent on their properties as a source of income. All this nonsense I keep getting from Canadian folks claiming “the banks can’t let it fall as everyone’s personal wealth would drop”… Only Made in Canada. How dhumb can a country be to make it’s GDP and the wealth of its citizens quite literally dependent and addicted to real estate?
You mean the new FCAC guidelines. I’m sure OSFI is involved in some way (they talk to each other), but wrong acronym 😉
OSFI could decide to enforce mortgage rules but is deciding to maybe alter the wording of some things and then maybe implement that change next year. Great good that does this market… Of course, it is hard to fault OSFI since their mandate is really the stability of Canada’s banks. They are not there to serve the public of Canada in other ways. The banks are making their job hard enough.
It is a shame big money does not know about the real risks at Canadian banks or we could get some quick changes in our markets. That enforced confidentiality that OSFI works under with banks really pays off here. A government regulator without public transparency in its regulatory actions. “We do not think it is fraud” I guess that might change if whistleblowers keep digging up junk about CIBC and others going forwards and cause a downturn in banking.
Its not dumb, if they make the country dependant on real estate then the Canadians wont open their eyes and see all the potential of other resources that the country could be making money from, why? Because the decicated resources then wont be so dedicated . CHINA or whoever else you think will take over next. Greed was always here and its a strong msg that its here to stay.
Better check your data. It’s not the OSFI.
The housing price chart is starting to look like a classic market crash chart with us just rounding the end of the “return to normal” period right now, right before the real value drops would happen.
I have absolutely no idea if this correlation makes sense in this context, but I’d have pause buying housing in Canada in the next few months. But I doubt many people will because the mortgage rates are so high that very few people can afford to anyway.
Dumb idea: utilizing every trick in the book to keep RE prices goosed.
Dumber Idea: bringing more suckers into the Ponzi Scheme just when it is on the edge of collapse.
Dumbest Idea: appointing a Minister of Finance with a degree in Russian Literature.
👍
They get 100 new immigrants ( visitors and PR) to continue the rat race
Frankly this website has been helpful in providing counter-info to oppose the mainstream narrative. It made me look into interesting stats. One of them being the 30 yrs and ongoing fall of productivity per capita in Canada. There is no housing crisis, it is more a artificial housing overheat, where the rental market was purposefully under stimulated to increase asset value. While this might seems natural to many, it is in fact a dangerous strategy. Putting new money in already existing asset to the point where it becomes out of reach for most of your citizen is pure folly. The housing market has been gaining value while we’re producing less per capita. Canadian household have staggering 187% (if not more by now) of debt to revenue ratio and most of it is tied to the real estate market. The bank of Canada seems to be resorting to higher interest to shake the population while making sure to protect the Great Canadian Corrupted Banks. None of it will help with their hope of on-shoring the industrial capacity off-shored in the 90’s. I hate to say this, but Ottawa has been ruled by a reckless ignorant class since the 90’s and now it is all unfolding. From the wildfires to the health system. The growth illusion is dying just like our purchasing power.
The “supposed” reason that the BOC is raising rates is to, in effect, lower demand for housing and by extentioin, lower housing prices. However, at the same time they are turning a blind eye to banks who have extended amortization rates beyond the maximum term allowed (The maximum mortgage amortization period is 25 years for CMHC insured mortgages and 35 years for non-CMHC insured mortgages). This stops the price of housing from going down. Twenty five percent of all mortgages have been extended (illegally) by the banks beyond the maximum terms allowed. In effect, they are nullifying the purpose of raising interest rates. The banks get rich and all Canadians suffer as a result- those who have had their mortgage payments double in size and those who will never be able to purchase a house due to high prices. Canada is being run like a banana republic by a bunch of white collar criminals. If they did this in the USA, they would all be thrown in jail.
Fact we have a fake real estate market currently.
Being held together by these government stop gaps and ridiculous allowance of extended amortizations, and other concessions..
How long will it take for reality to set in that all of these people are not owners of property just tenants with a 50 -100 year lease.
When the UK raises rates to 10%+ to crush their inflation and trigger a global debt crisis. UK always leads the way 🙂
Job losses and lay offs always kick the housing game in th pants. If you paid too much you have no one to blame but yourselves. Buy 20-50 USA homes for a million dollars. Collect USA rent dollars for the rest of your lives and never work another day. Ka- Ching!!