Real estate prices across Canada have grinded to halt. The Canadian Real Estate Association (CREA) aggregate of major markets show annual price growth has fallen close to flat in June. Nearly half of Canada’s major markets are now printing declines from last year.
Canadian Real Estate Benchmark Price
The price of a typical home across Canada in a major city.
Source: CREA, Better Dwelling.
Canadian Real Estate Prices Are Up Just 0.9%
The price of a typical home across Canada is flat from last year, according to CREA. The aggregate benchmark of $636,700 is down just a few hundred dollars from the month before. This represents a 0.9% increase compared to last year. Note, that’s 0.9% – as in less than a full point. That’s the lowest annual gain since 2009, and on target for a negative gain once inflation adjusted at year end.
Canadian Real Estate Benchmark Price Change
The annual price change of a typical home across Canada in a major city.
Source: CREA, Better Dwelling.
Real Estate Prices Made The Biggest Advance In British Columbia
British Columbia was home to markets that made the biggest advance. The composite benchmark in Fraser Valley dropped to $833,100, an 18.25% increase from the year before. Vancouver Island’s benchmark reached $487,300, a 16.48% increase. Greater Vancouver reached $1,093,600, a 9.5% increase. Worth remembering that Fraser Valley is a market so close to Vancouver, agents share reciprocal benefits.
Canadian Real Estate Price Change – June 2018
The annual price change in major Canadian real estate markets, in percentage points.
Source: CREA, Better Dwelling.
Greater Toronto, Regina See Biggest Declines
Greater Toronto and Regina were on the other side of that stat, showing the largest declines. Barrie, the real estate board north of Toronto, saw their benchmark reach $473,400, a decline of 6.53% from last year. Regina’s benchmark reached $279,700, a 6.09% decline from last year. Greater Toronto’s benchmark reached $772,100, a 4.76% decline from last year. Seven out of fifteen of CREA’s major markets are showing annual price declines.
Higher rates and slipping sales, have slowed price growth to the lowest level in nearly a decade. The last time prices growth fell to this level, Canada was seeing rates slashed by 4% to soften declines. This time the Bank of Canada doesn’t have 4 points to cut, so it’ll be interesting to see what stimulus measures they’ll try to pull.
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Assets have a funny way of balancing themselves out. The growth chart gives us a pretty good idea of what comes next IMO.
That foreign buyer tax is so effective, it’s taking out other markets. LOL
This is how monetary expansion and contraction works. When rates go higher, prices have to move lower. It also makes existing debt holders on variable rate mortgages less likely to move as well, as they see their cost of ownership rise.
Vancouver’s sales are coming down pretty hard, I fully expect those gains to be lost by year end. Less than 100 detached houses sold last month.
There is no Canadian real estate market. Every market is dependent on there own local variables, and business. Pricing them as one is hogwash, bear fodder.
If every major city, and country has seen price growth synchronize, why exactly do you think Canada’s markets are now local? Crack open a new book, because your real estate education circa 1980 won’t cut it today.
I’m starting to think we will see bull trap over the next couple months. A few of the bullish real estate porn sites I keep tabs on have gone back into orgy mode in the last couple weeks. Just a circle jerk of “world class this” “supply and demand that” “YOY UP! ….ugggggggggggg yeaaAAAAAAAAAH!”.
Just remember to use protection kids.
Literally read “we’re running out of commercial real estate” this morning. The turnover rate on Queen West is just insane, that can’t possibly be a long term issue.
I see wayyyy to many empty store fronts in the city for that to be even remotely true.
Hey Grizz, check out this article written in 2009 about how fucked the Japanese got (in 1996) when they bought all these apartments for $700k+ back in the day.
“he bought his apartment in 1996, the year he retired from Yamaichi. He paid 76 million yen (about $775,000 at current exchange rates) for the place, borrowing 59 million yen of the total to finance it. That debt is the bane of Matsushita’s existence.”
http://content.time.com/time/specials/packages/article/0,28804,1902809_1902810_1905192-2,00.html
Reminds me of Vancouver.
Sad but good read. Hopefully Canada doesnt go through lost decades
Do you guys even know the demographics of Japan? How they are actually losing population? They have more people in the later part of their lives vs younger?
Apparently not. So no, Japan is not a good comparison.
Ohhh yeah, that kitty be bouncing but I’m surprised ‘da popz’ hasn’t happened the way I thought it would; I was expecting two months of strong performance. My theory is that it is coming or, potentially more likely, that the asset appreciation was so high and the access to debt (and money in general) has been cut off so rapidly (thanks BoC and Emperor Xi!) that people can’t just pile in if they wanted to. I mentioned a condo town falling apart in what I strongly believe was financing at the bank. With this and other info I have, If I look back it seems like the bull trap started in May and will be done in the next 60-90 days…prices are coming down and come fall anyone over 60 years old is going to be freaking the fuck out if their retirement is based on the equity in their house. Reverse mortgages are taking off but I personally believe only the worst off will even try this route because it doesn’t take a genius to realize it is a zero sum game and the cash could be reinvested and generate income vs dying in your house (or CHIP’s house) and having nothing. BD4L.
Guess it really comes down to when will the “investors” realize that “paying” 500k for 500sqft of construction materials in the sky, losing money month over month to do so, while watching your carrying costs increase, is a bad investment strategy.
Grizzly Gus…
Not only was that hilarious, but the use of language and imagery was profound. One of the best comments I’ve read on the internet, PERIOD!
LOL for days.
Price growth will be flat for a while. It’s not going to outperform other markets, but we’re a growing country. Our real estate will always be in demand.
There’s only a couple of options, and flat for a while isn’t on there. Flat for a long time, maybe. But there was a presentation at CMHC’s housing conference last year that showed there’s almost no chance it could be flat until incomes catch up. It requires a crash, and a reset – or massive debt deflation (salting the earth the loonie walks on).
There was a cash back offer of 5,900 for a house in our neighborhood…never seen that before..another one was on the market for over 6 months and finally sold for exactly 25% off the original asking price…I live in Etobicoke – Markland wood
The RE agent is manipulating the sold price…the $6K is off book in terms of the final transaction that gets reported. If I sold you a house for $100K but gave back $60K, which the ‘market stat’ would suggest we’re still humming along the reality is a property just took a $60K haircut. These sort of things bubble to the top. There is no more money. No mas. BD4L.
Good point
In GTA, ON, Foreigners and internal investors were buying homes and condos as an investment property. These homes and condos were the main source of rental in GTA. Because of rent control, and price not going up as much is it did before, they are selling them now. This caused sale price to go down a bit and it is good that purchase prices dropped or may even drop further (I don’t think so). Good for people that can buy now. But the rental prices are going up crazy. My friend rented a two bedroom for $2,500 twelve months ago but now his neighbor rented the same condo for $3,500. They say 35% percent of new builds used to be for investment purposes in GTA. If people stop buying for investment, the renters will be doomed. They can’t afford $4,000 rent for a condo. Also at one point, maybe this year or next, the investment properties will be out of stock. On the other hand, new low rise homes are not being built anymore. According to BILD GTA, new detached homes build are almost stopped. Only condos are being build. If there is no more property to be sold, sale prices will go up sharply and maybe the rent stabilizes at that point but this will be too late for renters. By then rental prices will be completely out of reach.
Hi Bob! Riddle me this: there ain’t no more fucking money. Hmmm, is that even a riddle? Or do I need to put a question mark on it? Let me try again…Riddle me this: there ain’t no more fucking money? Again, not sure if this is a riddle (got my minor in hamster pants…sooo cuuutee!). Just buying and renting because ‘people gotta live’ is a false narrative because, unless I’m missing something, there isn’t a parallel dimension renters jump back and forth from where they can bring back lump sums of cash to pay for the ever increasing rents.If so, sign me up! Not sure if you speak spanish but I’ll leave you with this: No money = No mas. Live in the light. Don’t spread filth. BD4L.
My daughter recently rented a 2-bedroom 1200 sq. ft. duplex in a prime Casa Loma location for $2100/mo. In the building she vacated, in the same area, they have been trying to rent out her since marbleized kitchen 1-bedroom for $1750 for more than a month, with no takers.
The bloom is clearly off the rose.
The RE market is a bad guy in a B-movie hanging by his fingers at the edge of a cliff. When the U.S. starts into it’s cyclical correction next year, Canada will be close on it’s heels. The economy will be stomping on his fingers with jack boots and the the safety nets are in tatters.
I realize that most people on this forum are typing from their phones, but… The grammar errors that I see in quite a few of the posts have me questioning the validity of any information they are sharing…
I’ve been reading this blog since I found out I was being expropriated so that I was aware of market forces and potential movements that I would have otherwise been in the dark about. Pretty much everything is happening almost on time with what the data on BD has been showing. I can’t speak about the future but I can comment on what I have seen in the past year.
Regarding Rental prices: Sure the landlords can keep charging more and more. They will run out of people willing to pay higher and higher rents (my wage increases seem to be matched to inflation…) There isn’t an unlimited amount of money in this city. When the ball drops quite a few of those renters willing to pay the higher amounts will run out of cash too.
After reading quite a few comments I have noticed that the narrative for those who were riding the wave up have shifted from making money on flips to making money off ever expanding revenue from rental income. Just like the bubble collapses so does revenue from overpriced units. Right?
I am very curious to see if listings of Condos completed and just entering the market will rise. I suppose that would be the last piece of the puzzle.
That is an interesting observation that the narrative has changed to a rental income boom for landlords. There’s two problems with that narrative, the first being negative carry. A lot of these recent secondary market landlords require prices to increase just to be able to break even.
Second, rents are limited by income. If you raise them quickly, you get a) employment inflation, and b) people move. Employment inflation is important to keep down, because we’re already at “full employment,” which means wages are growing faster than they typically would. This means there will be a pullback on wages on the next recession. As for people moving, our rents are getting close to Manhattan. Manhattan can’t keep young people anymore, and consequently no company wants to be there – unless they have to.
If I recall BD and/or others have provided some info (please bitch slap me if I am wrong…loooong day!)Toronto is more expensive than Manhattan for both purchase $/sqrfoot and also the rental market (tiered to 1br, 1+1 etc). When income is factored in, and again I may have misread/stroked-out but Toronto is well behind. Funny how in the US there are’big city wages’ which here it is just ‘southern ontario, I guess you’re effed wages’. I digress, this is one psychological factor in naive/silly/FOMO/herd mentality and I forget what the BD post called it but it is a form of scarcity/luxury projection where the assumption is; price = quality/value/desirability = high demand = low supply = Infinity & Beyond = Buy buy buy. Therefore you can literally take a turd, shine it and charge a ridiculous amount and some fool is going to come by an gobble it up because…well, there must be value if someone is selling a $1M piece of poop! Tack on ‘normal’ appreciation of the double digits and buying that steamer now means you’ll be up $100K in a year. Sooo smart! All joking aside, this sort of game has been played for hundreds of years. Con men have made a living of building false value/scarcity as well as luxury brands…Hermes has a bag that has a multi-year waiting list and costs upwards of $60K…for a bag. The bag doesn’t not come with a BMW btw. Live in the light. BD4L.
(Blue touches noes and winks) Blue wisper: No mas, No mas.
Live in the light. BD4L.
First of all i dont have to be a math professor , and dont have the data of one man working and paying about 15 seniors to be kept out of the poverty line , as we seniors are living into 90 years of age , i think there is a big baby boom now , were as 10 to 20 years from now there will be tons of houses and apts for rent and sale , dont think there is a gold standard any more to back up the canadian dollar , so what the hell is really happening out there , ya immigration ! lots of laundered money! people getting great interest from other countries !! and brought in buying here , right now , we are in deed of a big change , and need one fast ,all kinds of our young people living on the streets , some thing crazy going on
These articles are great but they could be even greater if they included more details from a broader range of provinces. Why no representation out east – Halifax, Moncton, or St. John’s?
Because those places don’t count to the rest of Canada. If the NL real estate situation was occurring in Toronto or Vancouver – there’d be blood in the streets. Currently in NL people are losing 30+% on their properties. They purchased at 300k, put in 200k and are trying to get out at 320k. It’s not just a few. The number of months of inventory is over a year and its been that way for 5 years. High end properties are taking a bloodbath. Large homes previously listed/appraised at 1.25M have gone for 750k. The amount of capital that has been destroyed is amazing. Newfoundland is shedding non government well educated citizens. Outmigration was 2000 people for 16/17. In 1st quarter of 2018, 1500 people left NL. In migration is from older, lower income citizens (refugees, new immigrants + returning retirees).
Sorry that should have been 2600 left 1500 came in – net loss of 1100ppl in the first quarter.
A lot of our client’s selling all are trying to push the envelope in price which is happening despite the slight downtick in sales in the high end. The rental prices keep soaring as well here, especially in Victoria and Langford. We’re seeing the most of buyers being from the mainland and rentals are mostly foreign students.
Its really amazing and interesting write up especially for those who are new in the industry or students who are doing research based projects. The collection of information will help all those who are interested.