Canadian real estate has a reputation for its resilient demand, but that’s about to change. The Canadian Real Estate Association (CREA), the industry lobby that represents all major real estate boards in the country, has updated their forecast. The new forecast now anticipates price and sales declines across Canada.
Real Estate Prices Expected To Fall Across Canada, BC, and Ontario
Canadian real estate prices are expected to end the year lower. CREA forecasts an average home prices of $498,100 across Canada at the end of 2018, a 2.3% decline from last year. This number is expected to rise to $513,300 by 2019, a 0.64% increase from the end of 2017. What’s interesting here is the industry is saying home prices will be lower by 2019, if you converted the forecast to real terms (a.k.a. inflation adjust).
Source: CREA. Better Dwelling.
Ontario Real Estate Prices
Home prices across Ontario are expected to end this year lower. CREA is forecasting Ontario will see an average price of $576,200 by year end, a 1.5% decline from the year before. The average sale price is expected to climb to $594,900 by 2019, up 3.2% from last year’s average price. Remember when the CMHC said more than half of Toronto real estate price increase over the past 7 years were unexplainable? The gains that spilled out into every suburb? Well, CREA feels Ontario will only need a 1.5% correction before moving forward again. Cool story, bros.
British Columbia Real Estate Prices
Yes, CREA even see British Columbia home prices fall, although not all that much. CREA is forecasting 2018 will end with an average sale price of $706,100, a 0.5% decline from last year. Prices are expected to rise to $724,600 by 2019, a 2.11% increase compared to the end of last year. The supply “shortage” and mass immigration to BC has less impact than inflation now.
Canadian Home Sales Are Expected To Decline
Home sales across Canada are forecasted to decline over the next couple of years. CREA anticipates 2018 will see 479,400 sales, a 7.1% decline from last year. In 2018, that number bounces a little higher to 496,500 sales, but is still 3.82% below last year’s numbers. The organization attributed the decline to policy measures in BC and Ontario, as well as higher interest rates and the mortgage stress test.
Source: CREA. Better Dwelling.
Ontario Real Estate Sales
Ontario is definitely going to feel the decline, with home sales continuing to fall from highs. CREA anticipates the province will see 195,300 sales, a 12% decline compared to last year. Sales are expected to recover to 208,600 in 2019, but that’s still down 6.01% from last year. Ontario has record building in a number of cities, and declining sales are forecasted. It’s unclear how the massive increase of buying supply, meeting a significant decline of capital is only results in a minor downtick in prices. But that’s how CREA sees it.
British Columbia Real Estate Sales
Yes, even real estate crazy BC is expected to see home sales decline. CREA is forecasting 2018 will close with 92,400 sales, a 10.95% decline compared to the year before. Sales are forecasted to rise to 95,100, but are still 8.35% down from last year’s numbers. This forecast is a little on the light side considering Mainland Chinese demand has fallen off a cliff, and the new OSFI new mortgage stress test impact the province’s largest city significantly.
CREA’s numbers are often optimistic, and unclear how they arrive at them. For example, the Bank of Canada estimates that 12.37% of mortgages issued last year, would not have passed this year’s stress test. Yes, many would buy a lower priced homes. The rest? Let’s assume that half will still buy, but now need to save an extra 20%. That would at least take an extra year to save 20% of a home price, to meet stress test requirements.
The delayed buyers who won’t be buying in 2018, are already more people than the decline forecasts. This is before you layer on anti-speculation measures, rate increases, Chinese capital controls, and a declining rate of homeownership. It’s also fascinating that all of these factors, only impact home prices for just a year.
What do you think? Realistic, or industry fluff? Drop your comments below.
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Certainly did. Thanks and corrected!
Okay, CREA. BC prices are only going to fall 0.5% by the end of this year. They’re already falling more than that across the province.
“CREA’s numbers are often optimistic, and unclear how they arrive at them.”
No shit. They also discount social capitulation. If home prices are falling, people will wait to see how far they go. They won’t start jumping in until they start seeing prices climb again.
I don’t know how low prices are going to go, but basically flat for two years doesn’t sound very realistic.
You know stuff is about to go down when the industry starts to admit prices are going to go drop.
Decline in sold prices is not occurring in my neighbourhood in downtown Toronto, they are increasing.
Very recently, a single family home on Palmerston Avenue, 2 blocks south of Dupont Street, on a corner lot, listed at around $1.8 Million and sold for around $2.4 Million. There are few houses for sale in this very desirable area very close to food shopping, a park, community center, library, French immersion school, TTC, George Brown College, etc. Condos with pre-sold/sold-out multi-million dollar units are in the works to be built along Dupont Street next to the CP rail track.
Detached SFHs are selling above list price, but not above the prices they would have gotten last March-April-May. Don’t confuse list price with market value. Listing well below market is a time-honoured realtor practice to generate lots of interest and hopefully a frenzied bidding war. Said practice will continue until it stops working. Which will be soon, as listing below market tends to have the opposite effect in a dead market.
Fallacious thinking. For sold prices across the GTA you may be correct about sold price decline but not in central downtown Toronto where there are few listings and high demand especially because there are very few existing single family houses and mostly semi-detached and row houses. Underlisting the price of a residential property is a “normal” real-estate business practice but, in a changing valuation market, what’s an underlisted price? If a house sells for more than the asking price it can always be claimed it was underlisted. If a house sells for less than asking price it can always be claimed its price was overlisted. Any property that sells for more than it last sold for it is a price increase. Are there many houses selling for less than their last sale price?
Very few properties are exactly the same, especially in downtown Toronto, they may be similar in type but their interiors, etc., are not due to being unrenovated, maintained, partially or fully renovated and the quality and style/taste of the renovation unless they are suburban subdivision cookie-cutter houses. So how is that taken into account in determining if a house price is over or under listed?
Contrarian’s post is not a result of confusion. It serves to push three narratives: a) maintain the myth of at least some sort of scarcity (you can see the trolls here pushing hard “there is no quality in Toronto” argument lately) b) promote a specific neighbourhood (most of the comment is a cut-and-paste from a RE spam template – “very desirable area very close to food shopping, a park, community center, library, French immersion school… yada, yada, yada”) c) convince people that there are street fights between the desperate real estate wannabe-owners to earn the privilege to part with their money.
Mh and what is your narrative? Please don’t tell me reason every day you post Canada is new Greece because you have no agenda and you are innocent. We all know what your own narrative is too! And What’s with the troll…don’t like a comment make it a troll? Plus too many people like me bought 10 or 15 years ago and bought it for personal use not investment neither flippers nor foreigners. And even price go down what the big deal? It’s already up 200 percent any way. No one will go bankrupt And no we are not becoming third world county any time
Soon! So that you can buy in low and sell in high and make money. This tell me who are future flippers instead of accusing other people.
I see it struck your nerve. Given your screech it sure did. This country would be lost without patriots like you.
None of what I posted is from a “template”, totally my own words. I stated exactly what I experience and observe, not from some real estate promoter or pundit who doesn’t live in the area. I’ve lived here for 25 years and definitely know what’s happening here unlike you and others who don’t.
Contrarian It’s nothing new. Any time I say that goes against there own narrative and what they want you will be accuse as a troll.
MMR and cont are trolls… You don’t say much but spout the same false hyperbole. BD posts data and you just work to be subversive as though the data doesn’t exist. In 6 months none of the cockroaches will be here anyway,too busy scrambling for the crumbs.
Same with annex. Very few detached home in market for sell. Most of my neighbors bought houses 10 or 15 years ago are now seeing there home price is up by 200 percent or more in last 10 years. If you hold Property in prime downtown locations and if it’s detached it does have good value.
One house sale doesn’t dictate the market. Plus there is also the chance that the buyer who bought the place grossly overpaid because he was caught up in the hype of the bidding war. This is the reason why Realtor’s intentionally list it under market value to attract hyped up buyers like this. List price when it’s under market value doesn’t mean anything.
In the area I live in, house prices have seriously escalated in the last few years. For example, a detached house down the street from my house, on Palmerston Avenue, sold for around $900K approximately 5 years ago and was a gut-job renovation which took over a year to complete. It sold about 18 months ago for $2.7 Million and the new owner told me that, after his offer was accepted, he was offered $300K more to sign the accepted offer over to someone else, he refused. The house that very recently sold, a block further south, is not as substantial in size as that one but it was listed at $1.8 Million and sold for $2.4 Million. Houses in the area are not declining in price, they are escalating dramatically due to very limited supply and very high demand. A lot of very well-off buyers are looking for houses in the area and are willing to pay well for the area’s location, amenities, and nearness to TTC and closeness to their work. There’s a turnover of socio-economic status occurring from lower and mid-middle class to upper middle class as evidenced by the escalated house prices and the lower value and older vehicles, Ford, GM, Honda, Chrysler, Kia, Toyota, Mazda, etc., being replaced by Mercedes, Land Rover, Lexus, Tesla, and other higher priced vehicles parked on the street.
I agree with you that certain pockets are still seeing a lot of action however, if you look at the market as a whole things are not looking so rosy. Keep in mind we are still on the tail end of this market euphoria so we will still see more of these type of high priced deals coming through the pipeline. However, when sh!t hits the fan everyone will be effected and home prices in all neighbourhoods including the Annex will come down.
Then what are you waiting for? Go buy some houses or condos. You indicate you own and have a ton of equity;shut your gob and put it to use. Market will always go up and fundamentals are for losers who just don’t make enough to live in Toronto. The decrease is a blip and we’ll up YoY by 10% come Sept. You, MMR, Al D and RE prof can get into a massive circle jerk until we hit bottom. Shhhh… It’s gonna be ok baby,momma’s here.
. Did i say buy more? It’s already up by 200 percent. So it will be risky. My point is what’s with all this fearmongering? Most Canadians will
Not be impacted when price correct only thing you will
Lose is unrealized gain. But not every one is house flippers That’s why you don’t see people are selling houses. In annex every one sitting with large gain but they will not sell
Because they have family kids and will keep it for there future generation. Stop thinking that every homeowner is monster.
The F ate you trying to peddle then MMR. You ate afraid to say it’s a good time to buy, but blatantly advocate it’s not a bad time to buy.
You’re flip flopping more than a fish out of water. Pick a side already!
John What side? Did you ever realized what you wishing for? A recession like 2008 that happen to south…don’t buy if you don’t have to or can’t handle the mortgage. But I am saying house price correction will not trigger economy meltdown…stock market crash…business bankrupt…pension gone no that will not happen. So stop being fear mongering.
Mmr, why do you come here everyday to say the same shit? where is the proof?
Who are you trying to convince? Give up! The entire world knows Canada is in trouble. Do you think telling everyone to stop fear mongering will change anything?
If your so confident, put your money where your mouth is, Go buy!
If you feel now is not the right time, then your in agreement with us. Please give us a break or at least provide some evidence that everything will be just fine….. if not bugger off already….
I bet I can tell you the part of the article you liked the best:
“CREA feels Ontario will only need a 1.5% correction before moving forward again” LOL
I think people struggle to understand that real estate price action in Toronto is hyper localized now. I would love to live off of Queen East one day (btw Broadview and say Leslie). There are NO listings. So the prices are doing just fine. Now compare that to where I grew up in Thornhill and it’s a completely different story.
My parents home could fetch 1.1M last April and now it’s about 800k if we’re lucky. Homes in the luxury pricing bracket in Thornhill are getting SHALACKED! I saw pre-con signs for Bathurst & Major Mackenzie with $1M price reductions lol. $4.3M down to $3.3M, $3.3M down to $2.3M and so on. Imagine having $1M shaved off your equity, yikes!
I’m only going to buy a property in a highly sought after place in downtown Toronto. But sadly, it’s going to take forever given current pricing :(.
Taking Toronto, York Region specifically
funny seeing all the res agents pulling the switcheroo to commercial as of late, industrial to be specific.
Unfortunately there isnt a lot of product going around….tight tight tight =)
This with little to no office product in the core, makes you wonder how bad those commissions will be hit and for the economy no? =)
its a weird market out there folks….careful not to get carried away……the spin offs are already showing……YoY sales drops in related hard wood and granite etc as of late….short term hard to say, but give it some time…..
We may all be wishing to go back to the drunk’n sailor debt and RE habit we dumb Canadians salivated for, for SO LONG….
Well maybe not, I want Poloz to raise 3 times this year, squeeze those debt piggies.
Sounds like you should invest……
I’m in the industry and I never believe what these yahoos have to say. CREA & TREB is full of BS. I don’t blame the public who think all Realtors are a bunch of idiots because of reports like this. Unfortunately, many Realtors will believe what CREA has to say and start regurgitating all this crap on their social media. The industry leaders should tell the public how it is not what it wants it to be. The GTA has experienced a drop in sales of 22% in Jan and almost 35% in Feb. So this trend is all of a sudden going to change in light of all the new restrictions and end up with only a 12% drop in sales overall? The last stand in the GTA is the downtown condo market and the only reason why is because there is a lack of active listings which are propping up the price gains. Once this final front falls it’s going to be interesting to see how long speculators will hang on before opening the flood gates of listings.
Thank you for your honesty. I believe this downturn will be the nail in the coffin for the RE industry as we know it. If an agent is viewed as a number jockey with a little contract experience (I.e can fill out offer docs) it does not take a genius to see where it is headed. The only thing keeping it afloat has been the boom.
A boom that did last almost 30 years though. Most agents working today have no idea what things were like in the olden days, when corrections would actually CORRECT expectations.
That’s so true. I ask friends if they remember the movie “American Beauty” with Annette Benning? In the opening of the movie, she plays a real estate agent who has to go through all means possible to sell a home in southern California. The way she depicted it, is the way real estate agents normally operate in a non-boom market.
Having to go thru all means possible, just to attract prospective buyers. Most agents are not even used to that or aware of it:
American Beauty – Annette Bening I Will Sell This House Today:
Yes we’ve had it real good. I can’t wait for a shakeup because there are way too many incompetent agents in this industry. It’s too easy to get a license and unfortunately it shows in the quality. A good agent needs to be well versed in economics, accounting, sales, finance, construction, customer service, technology, local geography and commercial-family-tax law, in addition to all the real estate stuff. Plus they need to be up to date on all current events so they need to read all the news daily. Most people don’t realize how much you need to know for this job and that it’s easy. It’s no mystery as to why we have a poor public perception of our industry.
It would be nice if a realtor could be part accountant, part lawyer, part engineer, part economist, part marketer and part etc.. but that is not realistic. The truth of the matter is a realtor is a salesperson. The question is are they pitch and pressure salesperson or solution and value, salesperson. Not all realtors are evil. Some actually help people through the process
When people want to change their living space its because they are dissatisfied or they need to move because of financial stress. People change homes in all market conditions. A good realtor would make their clients have a good understanding of market conditions, and operate from there. if people only bought and sold when everything is perfect is fantasy. What is perfect for one person, is not the same for the next person.
Also in the industry, and it’s not that agents believe this – they think that those hefty board fees pay for trained economists. CREA economists, after all, have a masters degree in econ. There’s always that feeling (especially with newer agents), that CREA knows better. After a few years, if you’re a competent agent, you start to realize they’re often wrong. You’ll note most of the “high profile” (for Toronto and Vancouver, agents are being unusually quiet.
But you’re right. Their forecasting would imply there’s going to be a surge above last year’s levels, or even 2016’s record year in order to catch up. That’s ridiculous, and makes no sense.
It’s biased economics and they always try to put a positive spin on their reporting to prevent massive fear. The real estate market is driven heavily on market perspective so they want to keep this positive no matter what. Just see how they reported the drop in the year over year average prices for Feb in the TREB report “However, putting aside the price spike reported in the first quarter of 2017, it is important to note that February’s average price remained 12 per cent higher than the average reported for February 2016, which represents an annualized increase well above the rate of inflation for the past two years.” Putting aside the spike reported in the first quarter of 2017??? What happened, happened you don’t put it aside. It’s actually very significant because what happened last year was a show of how speculation plus low inventory could drive the market insane. Now these people are paying the price just ask the buyers in York region on how they’re feeling about their purchases early last year.
Prices are coming down. To what levels and how fast is a guessing game but The biggest trickster in the game is finally admitting it. When your momma says your ugly then you know it’s bad. Recession will hit in the next 12 months and will be used as a scapegoat for how prices came down and then will be used to guide the 2019 narrative. Create will never admit they saw this coming only deflect. Pigs and possums. Tick tock.
A big chunk of housing demand is from speculation in BC. Lots of new pre-sale homes are bought by speculators (I am sure they do not declare capital gains tax properly).
The impact is yet to be seen and prices will definitely fall as long as speculation is curbed. Also, BC government must go ahead with speculation tax (empty home tax)as planned as it is evidenced by the reactions from affected municipalities that speculation, in fact, has been rampant. Otherwise, these municipalities won’t oppose the speculation tax. These municipalities that are opposing to the speculation tax clearly do not care about folks other than developers and the wealthy.
Vacation home owners are actively participating in speculation regardless of individual circumstances. Canada has very very low property tax when it comes to vacation homes. Where came from, owning a vacation home very expensive. And it needs to be that way.
CREA forecasted a modest price gains in 2015, 2016 and 2017 in Vancouver. Well we all know what have happened in the last 3 years. Yes, prices doubled in 3 years. Speaking of experts.
CREA doesn’t forecast prices for local housing markets.
I personally would like the market to correct because it is very expensive but I just have some general observations that I was wondering about and maybe you guys can shed some light specially that you understand data you’re good at analyzing historical data as well.
So what I noticed is in the 1986-1989 bubble in Toronto the prices went up almost 25% to 35% every single year for 4 consecutive years at the time then finally the bubble burst where as now we just had a one year steep price increase which was 2017 and even then the price came down after April 2017 so if we compare today’s bubble to the one in 1989 maybe the current one still have some room to grow before it pops and that’s what one of the bank economists said last year. I remember they said the bubble was gonna continue for another 24 months after April 2017 and that was before the Fair housing plan was introduced.
So maybe that’s why may real estate and bank economists think it’s gonna keep going up because maybe based on the credit cycle we didn’t hit the peak yet before a real correction starts.
What do you think?
I bought my first house, a semi-detached unrenovated 3 storey, in downtown Toronto near Ossington and Harbord in 1980 for $65K and sold it 18 months later for $109K then immediately bought another bigger and better house, detached, 3 storey, renovated, 4 bedroom, in the High Park area, southwest of Bloor and Dundas St. W., for $140K. I lived there from 1982 until 1990 and observed the real estate price bubble occur which pushed the potential price of my house up to around $500K. That bubble burst and that house’s price declined to $249K which it sold for in 1993, not what it would have fetched at the peak of the bubble but a $100K increase from what it was purchased for. I lived with my young family in that house and got value from living in it and that neighbourhood which was worth a lot to us. Now, that house is potentially valued at close to $2Million. Now I live in a house near Bathurst and Dupont, Palmerston Avenue, that was purchased for around $100K and, even though it is semi-detached, it is worth quite a bit, well over 12 times what it was purchased for because of its location and large size. I have lived here for 25 years, I have had the use of this house and the neighbourhood which is very close to where I worked, I walked to work in 10 minutes, and now I don’t because I am retired and enjoy living here even more. I have money on every house I have bought because I am not a money hungry speculator, I buy a house to live in and for what the neighbourhood offers including convenience to transit, good schools, parks, community centers, food shopping, walkability, community, etc., the things that matter when one needs a place to live and is in for the long haul.
Ultimately, I don’t give a rat’s ass about “the market” and “making a killing”, that’s a speculator’s game and I hope the speculators get burned out of existence which, if there’s a big decline in prices, they will if they have to sell but they won’t get burned because the professional speculators are in for the long haul too, they will rent the property (rents virtually never decline) and sell when it is profitable or take a loss which they will write off against the profit they made elsewhere, it is the small potato amateur speculators that will get burned because they don’t have the cushion of capital to wait out a price downturn.
Rents go down. In calgary and Edmonton the rents are down about 20% from the peak of 2014
Calgary and Edmonton are not like downtown Toronto, they are in Alberta which has a less diversified economy than Ontario which caused a big exodus of renters employed in the oil industry and related businesses. Downtown Toronto has a serious rental accomodation shortage.
To Willy. Annual growth was as you say for 4 years. 1985 onwards. A few things of note though. Housing had gone through a correction in the 70s. So that peak trough was over a much shorter period then ours which had pretty much been building since 1996. Also end of 70 into the 80s marked a huge influx of women joining workforce. Household income went up big time.
To contrarian. The properties you were aquirimg throughout the 90 up to mid late 2000s would have been cash flow positive if you put down 20%. Long term investors today would be cash flow negative (short of a 50% down payment)
Each time I bought I had a smaller mortgage and haven’t had one for more than 25 years. If the real estate market crashes, I am not worried about the loss of “profit” and I am still living in my house getting value from it and where I live. There’s a big difference between people like me who buy a house to live and raise a family in it and those who buy short term to profit from flipping property. Also, money launderers who buy property aren’t worried about equity loss because they are willing to sustain that as a cost. Foreign buyers are also not worried because their money is invested in a safer place for it than where they live and some think of it as a potential haven they could live in if necessary.
On a side note. We are the contrarians.
Real estate associations have always been a joke when it comes to forcasting.
I have always thought that when it becomes common knowledge that real estate prices will not increase (not go down) the premium paid for future appreciation will evaporate immediately. Maybe this is the first step.
Rightly everyone talks about property prices in Vancouver and Toronto, the discussion has always focused on real estate prices out of control for years. Many people think that they will never stop climbing or if they stop only for a short time but then they start to grow again. Last August a financial advisor from CIBC called me and he tried sale me Canadian Bonds. I said no because I told him I think the rates are going up so the bond will go down…….I was right !!! The funny things was when I said to him that I want to invest in real estate because my property worth 600000 thousands dollars and I think by the next year will be at least 800000 and probably 3 milion in 10 years. He did not realize I was teasing him and kept the discussion with me saying he was agree with me. Well I do not think he believed so but gave me an idea who was in front of me to discuss how to invest my money !! Unfortunately average people did not connect the real estate price with the price of food, education, healt care, hydro, I mean how inevitably the real estate price inflation let rise the life cost. Also the people does not understand the bubble till the bubble blow up and unfortunately the only question difficult to answer is when the bubble blow up !!
Just met a money manager at TD… He sold last year in anticipation of a significant correction. Interesting how a lot of the rats have jumped ship… How many years Creator execs did the same? Pigs and possums. Tick tock
This is a joke. It’s impossible to predict the market like this.
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