Sellers come out of the woodwork after the rate cuts, buyers not so much. But Montreal, Edmonton, and Winnipeg play with all-time highs.
By Wolf Richter for WOLF STREET.
It continues despite rate cuts: Prices of single-family homes in Canada fell in September from August (-0.5%) and year-over-year (-2.8%), the sixth year-over-year decline in a row, and were down 16.7% from the peak in March 2022 (actual prices, not seasonally adjusted).
Condo prices fell 1.0% in September from August, and 4.0% year-over-year, and were down 11.4% from their peak, according to data from the Canadian Real Estate Association (CREA) today. Condo prices got hit hard particularly in the Greater Toronto Area, falling 2.0% for the month and 7.2% year-over-year, thereby carving out a new three-year low.
Sales and inventory in Canada.
Home sales in Canada rose by 1.9% in September from August, seasonally adjusted. Year-over-year, not seasonally adjusted, home sales rose 6.9%. Compared to the 10-year average for this time of the year, sales were still down 7%.
So the rate cuts by the Bank of Canada – and the lower prices? – nudged buyers a little, off the stalled levels before. But what the rate cuts really did was bring out the sellers.
New listings jumped 4.9% in September from August, with “a burst of new supply” at the beginning of September, “as sellers listed properties in larger than normal numbers for the first weeks of the month,” CREA said today. “Gains were broad-based, with most of the country’s biggest markets topping the list.” New listings have been increasing all year.
Total listings jumped by 16.8% from a year ago, to 185,427 homes in September. Supply ticked down to 4.1 months of sales at the current pace of sales, from 4.2 months in August.
Home prices by market in Canada.
All prices below are prices in Canadian dollars, not seasonally adjusted.
Greater Toronto Area, single-family MLS Home Price Benchmark Index:
- Month-to-month: -1.1% to $1,293,300; below October 2021
- From peak in February 2022: -18.4%
- Year-over-year: -3.5%, fifth month of year-over-year declines in a row.
New listings jumped by 9.8% in September, according to TREBB, and inventory continued to surge, pushing active listings to the highest level since 2009, as the rate cuts have brought out the sellers.
Greater Toronto Area, condo benchmark price:
- Month-to-month: -2.0% to $654,300, lowest since October 2021.
- From peak in April 2022: -16.6%
- Year-over-year: -7.2%, with 20 of the past 21 months booking year-over-year declines.
New listings of condos jumped by 9.9%, pushing up active listings further, as the sellers are coming out of the woodwork:
Hamilton-Burlington metro single family benchmark price (part of the “Greater Toronto and Hamilton Area”):
- Month-to-month: -0.4% to $908,000, below where it had been in August 2021
- From peak in February 2022: -21.5%
- Year-over-year: -0.9%, sixth month in a row of declines.
Hamilton-Burlington metro condo benchmark price:
- Month-to-month: -0.1% to $520,600, lowest since September 2021.
- From peak in April 2022: -17.7%
- Year-over-year: -6.8%, fourth month in a row of year-over-year declines.
Greater Vancouver single-family benchmark price:
- Month-to-month: -1.4%, at $2,015,900, below February 2022.
- From peak in April 2022: -3.8%
- Year-over-year: +0.2%, smallest gain since the drop in June 2023.
Greater Vancouver condo benchmark price:
- Month-to-month: -0.8%, to $762,000, below March 2022.
- Year-over-year: -0.7%, third year-over-year decline in a row.
Victoria, single-family benchmark price:
- Month-to-month: -0.4%, to $1,142,100, below November 2021
- From peak in April 2022: -11.6%
- Year-over-year: -2.0%, fourth year-over-year decline in a row.
Ottawa, single family benchmark price:
- Month-to-month: -0.5% to $729,000, below May 2021
- From peak in March 2022: -11.2%
- Year-over-year: +0.5%.
Calgary, single family benchmark price:
- Month-to-month: -0.7%, second month of declines from the all-time high, to $684,400.
- Year-over-year: +8.5%, the smallest gain since July 2023.
Montreal, single family benchmark price:
- Month-to-month: +1.7%, to $638,900.
- From peak in May 2022: -0.9%
- Year-over-year: +5.0%.
Halifax-Dartmouth, single family benchmark price:
- Month-to-month: -1.1% to $546,000
- From peak in April 2022: -5.9%
- Year-over-year: +2.1%.
Edmonton, single-family benchmark price:
- Month-to-month: unchanged to $462,400; the last four months were roughly unchanged
- Year-over-year: +9.4%
- In the 17 years since the peak of the prior bubble in June 2007, the index is up 16%.
Edmonton, condo benchmark price:
- Month-to-month: roughly unchanged, at $198,000, first seen in January 2007.
- From peak in June 2007: -18%
- Year-over-year: +10.7%
Quebec City Area, single-family benchmark price:
- Month-to-month: -1.4% to $418,600
- Year-over-year: +10.1%
Winnipeg, single-family benchmark price:
- Month-to-month: roughly unchanged for third month at $382,200
- From peak in March 2022: -1.5%
- Year-over-year: +6.3%
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Thanks WR for this report.
It is hard to believe that people are paying so much $$ for homes in Canada.
Looks like free money has truly turned people’s brain into mush.
As far as I can tell, the “bubble” has taken a hit, but is still winning overall. Down single digits after doubling in the past 10 years.
1. “…down 16.7% from the peak in March 2022” (first paragraph) means “down DOUBLE digits,” not “down single digits.”
2. Give it some time. RE moves slowly, as you can tell. The peak was 2.5 years ago.
3. Just for the fun of math: If something “doubles” in x years (say from 100 to 200), and then drops 50% over the next y years (so from 200 back to 100), it gives up ALL the gains, not half of the gains.
4. If something “doubles” in x years (from 100 to 200) and then drops only 30% over the next y years, so from 200 to 140, it gives up 60% of the gains.
5. If something “doubles” in x years (from 100 to 200) and then drops only 16.7% over the next 2 years, it gives up 33.4% of the gains. That’s over a third of the gains so far.
The lower-lows on the Toronto and Hamilton-Burlington condo charts are a red flag leading indicator.
During the 2006-2010 housing bust, condo prices fell faster than house prices. Looks like that will happen again. Bet it’s not just in Canada.
Condos are easier to speculate with than houses: standardized designs built in volume, simpler to maintain, and less-expensive to buy/sell.
Seems likely that as more condo price charts show lower lows, more speculative holders will look to sell rather than holding a declining asset.
“Condo prices fell faster than house prices. Looks like that will happen again. Bet it’s not just in Canada.”
I agree – just look at the ‘condopocalypse’ taking place in Florida lately: some properties are literally down >50% from peak, and are back to their post-GFC (2014-ish) prices.
Similar declines coming soon to a condo market near you…
I think the Florida condo collapse is due to the nature of ownership. Vacation home vs primary residence. AND don’t forget the insurance premiums.
Been harsh for many. Canadian here.
Impact of: High prices; moderated slightly. Short term mortgage renewals (what’s available) into higher rates. 25% cummulative inflation. Rising taxation. Low wages, with low inflation adjustments, for many. Sellers’ expectations, (and others connected to supporting high prices) . Decade or two of central banks enabling. Immigration of wealthy, business types, and unmatched skills to replace retiring boomers (esp who build and maintain). Policy? avoidance of major roll back in asset prices; so except for top incomes, and where kids have parental mortgage supports, then a policy? preference for declining standard of living.
Imo.
Cities like Edmonton are rising because, for now, they have lower prices than other cities so you can still arbitrage a sale in, say, Toronto, to buy there.
Winnipeg at least used to be a bit weird as the price dynamic was extreme regarding location. Still much cheaper overall than Van or TO.
Real Estate prices will have to lower unless wages seriously increase, IMHO.
Just a clarification from a long-time Ontario resident.
The Hamilton/Burlington figures are distorted because Burlington is an ultra-rich suburb and Hamilton is a depressed industrial zone. Burlington home sale figures lift the total and distort it unreasonably; Hamilton ones do the opposite. Because the Burlington market is more robust, it has an outsized influence on the overall market, even though there’s only 160,000 people in Burlington and half a million in Hamilton …
You can say the same thing about any diverse real estate market — there’s always one end that distorts the other, or whatever.
There are areas in Vancouver that are down substantially, and there’s some bloodletting going on, but others are not, and so you get the overall metro figures. That’s just how it is everywhere.
Rate hikes i.e. higher monthly mortgage costs probably dominated most Canadian buyers’ minds for the past 2.5 years.
Now that the BOC has started a new rate-cut cycle (which directly affects variable rate mortgages, and should draw down fixed rate mortgages in its wake), should someone really expect RE indexes to continue their descent much longer?
The simplest view: buyers are mostly waiting a few more months for the expected jump in affordability… while sellers who can’t wait to sell are making the price cuts necessary to unload promptly.
Looking at these graphs the peak is Mount Everest and it doesn’t seem like the descent has even reached the summit’s base camp.
….don’t think these home prices in Canada should fall much at all, why should they, everything else has doubled, tripled. Why should home prices and home owners suffer the agony…
Over the coming months, as prices continue to rise on everything…wages will also continue to rise, the markets inching upwards, gov spending higher, I wouldn’t expect much in the way off falling home prices in Canada or here.
Then add on higher building costs, higher land values, higher taxes, insurance.
If your looking for a “bang” for your buck…a pop or pip squeak is what your going to get.
I saw an interesting graph for U.S. build to rent homes.
The graph started in 2000 but prior to 2010, BTR were about 2.5% to 3% of all new construction.
2010 to 2020: 4.5%
2021-2022: 6.5%
2023: 9.5%
Not sure the 2021-2024 is just a blip or this is will continue at the 6.5% to 10% levels. With the ability to build and sell the mortgages that will be backed 100% from any defaults probably means it is very low risk for this type of business.
If the BTR area experiences a downturn, just send the keys back to the bank….but what I mean is MBS holders….. but what I really mean is the GSEs….what but I really really mean is the Government……but what I really really really mean is the taxpayers.
Yes, it has been huge – the biggest trend in homebuilding. And we discussed this here many times, including in April with an article and chart, see below.
Build to rent is higher-end supply of single-family rentals for renters of choice with higher incomes. They’re very popular. People use them to arbitrage the lower rents v. monthly purchase costs. Instead of buying, people rent a similar new house for $1,000 a month less, and with all the flexibility that comes with renting. And no worries about homeowners’ insurance and property taxes.
ALL the big single-family landlords are doing build-to-rent, some through their own homebuilding divisions, others through deals with homebuilders. And what they’re selling are their individual houses they’d bought out of foreclosure in 2012 and that are scattered around all over the place and are inefficient to operate. They’re not selling the new build-to-rent houses – because they’re much less costly to operate. They’re selling the houses they bought in 2012.
I put some numbers in the linked article below, including the number of individual houses the big landlords sold while they added build-to-rent homes.
Your conclusion of build-to-rent homes going back to the bank is likely wrong, for these reasons:
1. Subdivisions of build to rent are very profitable because they’re much more efficient to operate than the scattered homes that the landlords bought out of foreclosure.
2. The houses they bought out of foreclosure by now have doubled and tripled in value, and they’re selling those for capital gains, to fund the new build-to-rent, and to shed the high operating expenses.
3. The big landlords don’t finance their houses with mortgages. They borrow at the institutional level as needed by issuing bonds, including asset-backed securities (ABS) backed by rental cash flows.
Biggest Landlords Pile into “Build-to-Rent” Single-Family Houses, but Sell Older Houses into this Overpriced Market
Here is a quote and a chart from my article:
Last year, 27,495 build-to-rent single-family houses were completed in professionally managed communities with at least 50 single-family rental houses in markets covered by Yardi Matrix research, according to an analysis by RentCafé, based on data from Yardi Matrix. Up by 75% from 2022!
It does not include single-family rentals that are not located in build-to-rent communities or in smaller build-to-rent developments.
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