There were a lot less Canadian real estate buyers than normal last month. Canadian Real Estate Association (CREA) numbers show a drop in sales for February. The decline makes it one of the slowest Februaries for real estate sales in over a decade.
Canadian Real Estate Sales Print Worst February In Over 12 Years
Canadian real estate sales just had one of the slowest Februaries in history. CREA reported 29,974 sales in February, up 25% from the month before. This represents a 4.41% decline compared to the same month last year. The monthly increase is seasonal, but the smallest jump from January since at least 2007. The annual decline makes it the fewest February sales in at least 12 years as well.
Canadian Real Estate Sales
The unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA, Better Dwelling.
The annual sales decline continues to trend lower. The 4.41% annual decline in February is larger than the month before, but only slightly. The positive note is the decline is smaller than the same time last year, but in a downtrend that is little comfort. The overall movement of sales numbers is trending lower across the country.
Canadian Real Estate Sales Change
The annual percent chage of unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA, Better Dwelling.
Quebec and Montreal Real Estate See Largest Growth
Quebec City, Montreal, and Winnipeg real estate made the biggest gains. Quebec City reported 781 sales in February, a 9.38% increase from last year. Montreal followed in growth with 4,370 sales, an increase of 7.66% from last year. Winnipeg was third with 677 sales, up 7.29% from last year. These markets aren’t exactly booming, so much as catching up to the national trend.
Canadian Real Estate Sales By Market
Canadian real estate sales in markets with more than 500 sales in 2018.
Source: CREA, Better Dwelling.
Vancouver Real Estate Sees Largest Drop In Sales
The biggest drop in sales were in British Columbia’s real estate markets. Vancouver had the biggest drop with 1,512 sales in February, down 32.53% from last year. Fraser Valley followed with 924 sales, down 29.63% from last year. Victoria came in third with 408 sales, a drop of 21.69% from last year. Two of those markets have recently become some of the most expensive real estate in Canada.
Canadian Real Estate Sales Change By Market
The percent change in Canadian real estate sales, in markets with more than 500 sales in 2018.
Source: CREA, Better Dwelling.
Canadian real estate sales continue to slide lower, after peaking nearly 3 years ago. The organization blamed the decline on mortgage stress testing, rolled out last year. If only the banks would let borrowers max out their budgets, while global real estate prices are on the decline. Will someone please think of the Realtors?
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Something ridiculous like 1 in 5 people bought a new home in the GTA in the past 5 years. How often do they think people will generate transactional value on an asset that’s suppose to take 25 years to pay off?
And that’s the problem with bubbles and the FOMO that is created. Despite what every number jockey (i.e. Agents, Mortgage brokers, politicians, Uncle Tony) likes to tout, demand is finite. What we’ll find once we break this down years from now is that we pulled forward 4-5 years of sales in and around 2015 using obscene amounts of leverage that was underpinned by equity extracted from the same asset class. Think about that; it’s like I took money out against my kitten to buy more kittens! Everything is gravy when I’m flipping kittens like cocaine but once the party ends you’re getting ‘triple dicked’; Your asset value goes down, your carrying costs increase AND now the only assets of value you have is illiquid at the ‘price’ you need. People with cash or debt NOT tied to housing just sit there and wait…and wait..and wait. BoC is attempting to stabilize the market but at this point pouring water on the front of the house while the backend is burning will still end in ruin. Tock. BD4L.
The titanic absence of non-diapidated rentals in TO sure didn’t help things. I got here in 2002, and it still blows my mind today how few decent options there are for rentals. Condos don’t count. I’ve lived in several major world cities and they don’t have the problem to the degree we have here. It forces more people to buy than would normally need to. The numbers are not all due to FOMO. Things were an epic shitshow before the bubble inflated. The housing stock was so deplorable.
This is the most accurate description of this problem. Unfortunately, it’s going to get worse before it gets better. We should all brace up for a rough ride, caused by the government’s inaction when it mattered and the stupidity of consumers with little knowledge about debts. Consumers were stupid enough to artificially fuel unsustainable price growth in real estate and here we are.
what people fail to realize is the the interest rate hikes that the BOC has done has not even filtered
through the economy and the housing market yet. The worst is yet to come, buckle up !!
Even according to the BOC, it should be 6 to 12 months between hikes to see the full impact. There’s a good chance they have no clue how a year worth of hikes are going to play out.
An ultra low interest rate housing crash and recession is going to be interesting, possibly catastrophic for retiring boomers and consequently for the economy as a whole.
Seems the govt is trying to play it both ways by raising rates virtually (B20) without actually raising rates. Many buyers just end up going across the street to alt lenders and paying a premium, without a BofC rate increase. The govt really seems intent on making a bad situation worse.
This is one of the most important lines I’ve read in awhile that debunks basically every argument against B20. So I hope people are catching it.
“If only the banks would let borrowers max out their budgets, while global real estate prices are on the decline. Will someone please think of the Realtors?”
Also, replace ‘Realtors’ with ‘children’ and you have a sweet Simpson’s reference. Though I assume they are 1 and the same at this point…
There is one big consequence the boomers and feds dont realize is a consequence of inflated real estate that will play out over the next 10 years.
A completely hollowed out tax base. Millenials now make up the largest working demographic. Im a millenial making six figures and my income is mobile. Why would I stay in Toronto and pay high taxes and subsidize some boomers retirement indebting myself for the next 25 years?
I have 0 debt or assets and am completely liquid, so I can leave this country with no exit tax, and you are going to lose out on 20 years of tax revenue from me. Lets see how fast cpp/govt entitlement programs collapse when the main tax base leaves. It starts with highly skilled/mobile but it will work its way down.
Thanks for the subsidized education, and you all deserve this and we shall see if the asian billionaires cash you launder through “students” provide any sort of tax base.
Expect massive wealth taxes and pension defaults as a result in the coming years.
I may come back in 5 years if real estate crashes 40% or else I’ll wait it out in a low tax jurisdiction.
You can blame the BOC low rates subsidizing boomers/bankers and your real estate lust when your “secure” govt pension defaults or the feds raid your retirement fund.
I’ll be kicking it in the caymans lol.
Let’s see how far six figures takes you when you have to rebuild after the annual hurricanes. Or when you want a school for your kids to attend. Or healthcare. I have more faith in Canada than the Cayman Islands for any of that – for a long time to come too.
Tom, caymans was just an example, havent decided which low tax jurisdiction to move to. Also I would be renting overseas so why would I care about natural disasters?
You are right if you have kids canada is great (I dont plan on having them). Also if you are some sickly boomer healthcare is good to have, but I believe in taking care of ones own health through diet and havent been sick in years (checkout forks over knives). Also, private health insurance overseas is only 100USD a month for comparable healthcare.
You would be surprised how far 50K USD can stretch in asia, you can basically live like a king while saving six figures a year.
The point I’m trying to make is the younger generation realizes they are getting a raw deal, and won’t take it lying down. You greedy boomers and your excess deserve whats coming.
Say goodbye to your tax base.
I have 0 faith in this country and the corrupt govt (snc-lavalin?) which has completely sold out to overseas money launderers/chinese polituburo at the expense of younger generations.
The thing about hot money is it dissapears as fast as it comes.
Same is true for highly skilled workers who are mobile.
You’ll get what you deserve, greed is not good!
Someone once asked me what it felt like to be rich. I said ‘fleeting’ because nothing is permanent. Accordingly, I try not to temp fate with an abundance of hubris Rich.
$100 a month for health insurance is not very inexpensive, but if your place of residence has lacks medical equipment or services you might not find the care you require. Possibly because they never had a tax base to begin with. That wont change because you’re not planning to contribute wherever you land. Try crossing a border when you’re sick. You’ll need the upper end of that very broad six-figure range under those circumstances.
No one gets what they deserve. One may reap what one sows though.
Completely agree with you, this jacked up housing price is just a huge wealth transfer from the blood and sweat of younger generation to the boomers. Young families have to starve their own family to pay taxes and high housing cost.
People with options and skills should leave Toronto when we are young and healthy, while we can. The way things are going the economy will go down the drain soon enough.
A city with no world leading industry and no lack of land, there is no real reason to support these prices.
Nothing says “Recovery” like the worst print in almost two decades.
Sales will recover in the Fall Market, this is just temporary.
#2018
House price is so much high against the average income of Toronto/Canada. The unusual price hick was in December 2016 to April 2017. House price got booted 40-50% in this time, thus price became unreachable to general income people. If some thing became unreachable for any reason needs to be corrected. House price needs to corrected here too. NOT LIKE THE WAY REAL ESTATE PEOPLE ARE THINKING that the Mortgage needs to be more easy. This thinking is killing game to general people. If you make easy buying process what its meaning?? You are buying with a high price, you need to pay every single month a big money in your whole life. Its like killing your whole life’s PEACE. So, please no more price hick, make it down thus general people can buy even though with hard STRESS TEST. In anyway, need correction of the house price.