Teranet: Canadian Real Estate Prices Drop 1%, Largest Single-Month Decline Since 2010

Teranet - Canadian Real Estate Prices Drop 1%, Largest Single-Month Decline Since 2010

Canadian real estate prices are seeing tapering growth in many cities. Numbers from the Teranet-National Bank of Canada index show one of the largest monthly declines in the index’s history. The declines were led by a massive drop in Toronto, which is the biggest component of the index. The monthly decline wasn’t enough to bring any of the cities into negative territory.

“But Teranet Is Delayed!”

Teranet numbers are one of the most misunderstood indicators in housing, with people claiming it’s “delayed.” That’s not the case. Real estate boards use MLS data, which is taken from sales that have closed. Teranet uses land registry data, which are sales that have completed. It generally takes about 60 days for a sale to register in the land registry.

MLS data is often “good enough,” especially in a market going up. A market that may be getting turbulent however, may have cancellations. Any sales that fail between close and registry won’t be counted in Teranet numbers. MLS data also doesn’t capture any private market transactions. Private sales are estimated to be up to 30% of the market, and are popular with overseas property owners engaging in urban land banking. Delayed? Arguable. However you get a more accurate market measure.

Canadian Cities Saw A 1% Decline In Prices

Nationally, the Canadian urban composite saw a monthly decline, but still remained higher for the year. The 11 city urban composite dropped 1% in October, led by a huge decline in the city of Toronto. This monthly drop was the largest observed on the index since 2010. The composite still remains 10% higher than the same time last year. There’s tapering, but it hasn’t gone negative at least. Let’s look at the biggest gains and declines.

Source: Teranet-National Bank of Canada.

5 Out of 11 Cities Saw Price Increases

Let’s start with the monthly gains, which occured in 5 out of the 11 urban composite numbers. Monthly gains were observed in Halifax (1.3%), Vancouver (0.7%), Quebec City (0.6%), Montreal (0.4%) and Victoria (0.1%). Vancouver and Victoria are now at all-time highs, with Victoria having hit a high for the eighth straight month.

Source: Teranet-National Bank of Canada.

6 Out of 11 Cities Saw Price Declines

Monthly declines occurred in the other 6 out of 11 cities in the urban centers. Toronto, which is the largest component of the index, saw a massive decline of 2.8%. Other cities that saw monthly declines were Hamilton (−1.8%), Edmonton (−0.7%), Winnipeg (−0.7%), Ottawa-Gatineau (−0.3%) and Calgary (−0.2%). Toronto’s decline is the third consecutive, and Hamilton is seeing its second consecutive drop.

Source: Teranet-National Bank of Canada.

All Cities Are Still Positive On 12 Month Trends

All of the cities in the urban index were up on a 12 month basis. Largest gains were in  Toronto (13.4%), Hamilton (15.7%), Vancouver (12.0%) and Victoria (14.4%). Still up, but barely, were Montreal (6.5%), Ottawa-Gatineau (5.0%), Halifax (1.9%), Calgary (1.8%), Edmonton (0.8%), Quebec City (0.6%) and Winnipeg (0.1%).

Once again, the monthly decline wasn’t enough to drag the index into negative territory. Markets that had a big run in prices, appear to be taking a breather, and giving back some of the gains. Markets that were left behind on the great Canadian real estate price jump are finally starting to see a slight bump higher.

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  • Kyle 7 years ago

    Garth, is that You? Prices are gonna sky rocket my friend. Keep dreaming of a major crash =D

    • Tommy 7 years ago

      Garth is two-faced. He tells his readers of an impending crash year after year, while he simultaneously buys and sells real estate, making millions for himself.

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