Canada’s exuberant real estate buyers are suddenly not-so-exuberant after interest rate hikes. Canadian Real Estate Association (CREA) data shows the composite benchmark price made a sharp drop in July. Prices fell by tens of thousands of dollars at the national level, with 9 in 10 markets seeing a drop. Markets have seen a typical home’s value drop up to $355,000 from peak valuations. Not even a full year of gains has been rolled back in any real estate market — that’s how out-of-control things were.
Canadian Real Estate Prices Fell $27,000 Last Month
Canadian real estate prices are down from peak, with the typical home across the country making a sharp drop. The benchmark price fell to $782,300 in July, down 3.4% (-$27,400) from the month before. Compared to the peak reached in March 2022, prices are now down a whopping 9.9% (-$86,000). It’s only a hair shy of being a technical correction, with 9 in 10 (89%) of CREA’s composite price indexes down from peak.
Canadian Real Estate Prices Are Down In Most Markets
The price of a typical home (composite-benchmark) for Canadian real estate markets in July 2022 vs peak valuation.
Source: CREA; Better Dwelling.
Canadian Real Estate Markets Fell As Much As $87k In July
Southern Ontario led Canada’s real estate boom over the past couple years and is leading its bust. The biggest monthly price drops across the country were all located in the region. The 3 largest dollar declines were Oakville (-$86,800), Mississauga (-$55,100), and Hamilton–Burlington (-$51,400). Absolutely monster moves lower, and deserves emphasizing this was just one month. Price swings in either direction of this size are extreme volatility.
Southern Ontario Real Estate Led July’s Price Drop
Southern Ontario real estate also leads in the biggest dollar drop from peak. The top three declines were in Oakville (-$355,000), Mississauga (-$224,100), and Cambridge (-$217,000). The region led on the way up and is leading on the way down, as price discovery sets in. That said, prices increased so much over the past few years this barely puts a dent in the gains made thus far.
Canadian Real Estate Monthly Price Change
The change in price for a typical home across Canada in the month of July 2022.
Source: CREA; Better Dwelling.
Toronto and Vancouver real estate avoided the extremes of change — the latter more than the former. Greater Toronto’s composite price fell 3.9% (-$47,400) in July, and is now down 13.3% (-$177,500) from its peak. It narrowly escaped the lists above, with the fourth biggest monthly price decline.
Greater Vancouver real estate has only begun to contract, though it was a fairly sharp one for the month. A composite home in the region fell 2.3% (-$28,600) in July, and is down 4.5% (-$57,400) from the peak. Vancouver had a later peak compared to the typical peak across Canada, but it’s making up for the lag quickly.
Southern Ontario Real Estate Is The Fastest Falling
Once again, Southern Ontario dominated when it came to prices falling at the fastest rate last month. The fastest falling markets in the month were Huron—Perth (-6.6%), North Bay (-6.5%), and Oakville—Milton (-6.3%). Oakville’s having a really rough time, isn’t it?
Canadian Real Estate Markets Have Lost As Much As 22% From Peak
Southern Ontario also led for the biggest drops from peak as a rate, with the worst markets losing more than a fifth of value already. The bottom three performers as a rate were Cambridge (-21.8%), Kitchener—Waterloo (-21.8%), and Oakville—Milton (-21.6%). As big as these price declines are, not one of these markets has shown negative annual growth — that’s how out of control home price growth has become.
A Handful of Canada’s Markets Have Hit New Record Highs
A handful of markets were able to buck the trend and reach a new all-time high, despite tighter financing. At the all-time high, the fastest growing markets were PEI (+1.9%), St John’s (+1.3%), and Sault Ste Marie (+0.9%). Only six relatively small and low volume markets printed a new all-time high though.
Canadian real estate prices are generally falling and very fast. Regions like Southern Ontario saw the biggest booms and are now falling at a breakneck speed. Even with these substantial declines, prices still haven’t returned to last year’s level. This highlights the unprecedented monetary policy mistakes organizations like the BIS attribute recent price growth to.