Toronto single-family -19% from Feb 2022 peak, condos hit 3-year low. Vancouver eases further. Calgary condos sag. New highs in some markets.
By Wolf Richter for WOLF STREET.
Home prices in Canada dipped by 0.2% in December from November and were down 0.2% year-over-year, the ninth month in a row of year-over-year declines. They were down 17% from the crazy peak in March 2022 and back where they’d first been in September 2021, according to the not seasonally adjusted Canada MLS Home Price Index Composite released by the Canadian Real Estate Association (CREA) today. Condo prices overall were on even shakier ground than single-family dwellings.
Home sales in Canada fell by 5.8% in December from November, seasonally adjusted, after four months of increases, according to data from CREA today. But compared to the frozen volume in December a year ago, home sales were up by 19%.
New listings declined by 1.7% in December from November. But with sales falling faster than new listings, active listings rose by 2.0%, and supply increased to 3.9 months, the highest since September.
Everyone was hoping mortgage rates would plunge after the Bank of Canada’s aggressive rate cuts to 3.25% from 5.0%, starting in June, including two 50-basis-point cuts in October and December. They did drop at first, but then they rose.
As mortgages in Canada come mostly with variable rates or with rates that are fixed for short terms, such as two years or five years, the Canada five-year government bond yield matters a lot to the housing market, and it has risen by 40 basis points since September. This is not what the housing market expected from the two monster rate cuts in October and December.
But every market dances to its own drummer.
When we started this series many years ago to visually document the crazy home price surge in Canada — to accompany our series about the US housing market — we never expected these charts to become this absurd. But this was the era of money-printing and interest rate repression, and absurdities became the norm.
Greater Toronto Area, single-family MLS Home Price Benchmark Index:
- Month-to-month: unchanged, at $1,282,000; where it had first been in October 2021
- From peak in February 2022: -19.1%
- Year-over-year: +1.1%.
The three descending peaks occurred in February 2022, May 2023, and April 2024. The other housing-mania spike occurred in April 2017.
Greater Toronto Area, condo benchmark price:
- Month-to-month: -0.3% to $647,200, lowest since October 2021.
- From peak in April 2022: -17.5%
- Year-over-year: -3.7%, with year-over-year declines in 23 of the past 24 months.
Hamilton-Burlington metro single family benchmark price (part of the “Greater Toronto and Hamilton Area”):
- Month-to-month: -2.7% to $869,100, back to February 2021
- From peak in February 2022: -24.8%
- Year-over-year: +1.1%.
Hamilton-Burlington metro condo benchmark price:
- Month-to-month: -0.3% to $517,700, a new 3-year low, lowest since September 2021.
- From peak in April 2022: -18.2%
- Year-over-year: -4.1%.
Greater Vancouver single-family benchmark price:
- Month-to-month: -0.1%, at $1,994,600, about where it had been in January 2022.
- From peak in April 2022: -4.8%
- Year-over-year: +1.9%.
Greater Vancouver condo benchmark price:
- Month-to-month: -0.4%, to $749,900, below February 2022.
- From high in April 2024: -3.6%.
- Year-over-year: -0.1%, sixth year-over-year decline in a row.
Victoria, single-family benchmark price:
- Month-to-month: 0.5% to at $1,151,200, where it had first been in December 2021
- From peak in April 2022: -10.9%
- Year-over-year: +1.7%.
Ottawa, single family benchmark price:
- Month-to-month: +1.0% to $729,300, where it had first been in April 2021
- From peak in March 2022: -11.1%
- Year-over-year: +3.7%.
Ottawa, condo benchmark price:
- Month-to-month: -0.4% to $404,400, below April 2021
- From peak in March 2022: -11.5%
- Year-over-year: -2.5%.
Calgary, single family benchmark price:
- Month-to-month: -0.2%, to $678,900, fifth month-to-month decline after a relentless two-year spike.
- Year-over-year: +7.3%.
Calgary, condo benchmark price:
- Month-to-month: -1.2%, to $338,100. Fourth month in a row of sharp declines after the gigantic spike.
- From peak in August 2024: -4.0%
- Year-over-year: +6.2%, the lowest year-over-year gain since January 2022.
Montreal, single family benchmark price:
- Month-to-month: -0.5%, to $637,400.
- From peak in May 2022: -1.1%
- Year-over-year: +7.5%.
Montreal, condo benchmark price:
- Month-to-month: +0.8%, to $413,600.
- New high
- Year-over-year: +5.9%.
Halifax-Dartmouth, single family benchmark price:
- Month-to-month: +1.2% to $533,500
- From peak in April 2022: -6.3%
- Year-over-year: +4.2%.
Edmonton, single-family benchmark price:
- Month-to-month: +0.7% to $461,900, roughly unchanged for the past seven months, and down a hair from the all-time high in August 2024.
- Year-over-year: +9.7%
- 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: +0.3% to $194,700, first seen in 2007.
- From peak in June 2007: -19%
- Year-over-year: +9.4%
Quebec City Area, single-family benchmark price:
- Month-to-month: -1.4% from the all-time high, to $428,400
- Year-over-year: +10.0%
Winnipeg, single-family benchmark price:
- Month-to-month: -0.4% to $378,800
- From peak in May 2022: -2.4%
- Year-over-year: +9.3%
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Unfortunately a 20% drop on a 4x run up in 12 years or so is basically irrelevant.
Amen, amen. I’ve been trying to send out the same message for a while now. It’s like a store jacking up the price 100% on a product and then cutting the price by 25%, to make you think you’re getting a good deal. Except with housing, it’s been a much higher markup.
If a $100 house has a 100% price increase, which is huge even for Canada, it’ll cost $200. If there is a 20% drop, it’ll take it down to $160, and that 20% drop cut the 100% gain down to a 60% gain. A 50% drop wipes out the entire 100% gain. That’s just how the math works.
But the US housing bust lasted about 5 years, so this stuff moves slowly. I understand that crypto mentality has taken over: if the price doesn’t collapse to zero overnight, it’s a nothingburger. But that’s just not how real estate works.
Yup. Insanity unchecked.
I recently saw a very interesting video about the 2004 Indian Ocean tsunami that killed almost 228K people. In the vid, a group of elephants became very agitated and broke their chains in order to flee to higher ground – this was before the tsunami happened. Also, amazingly, one father in the video said his son had dreams or premonitions for about a week and had an impending sense of doom. He verbalized it frequently before the tsunami.
It’s interesting how some animals and even a child in that video sense things that most people are oblivious to.
I believe the current real estate market is similar. A disaster is likely to happen. And when it does, many, if not most, will be caught off guard.
Mentioned in many news reports these days are stalled condo builds in Vancouver. Unfortunately, in the stampede to home ownership many prospective buyers paid in advance a pre -build price and/or a hefty deposit in order to have a guaranteed unit at a guaranteed price. Yes, the market was that hot and some buyers were that desperate. Now, with higher interest rates, many developers cannot finish their projects and some have even gone bankrupt at various stages of construction.
The buyers have lost their money, at least for the time being. They can’t get their money back and have no home to move in to. No one is rushing to take over the buildings, either. Last week the news featured a developer with three large towers sitting unfinished, and then interviewed buyers who lost their money, at least for now. They are stuck in limbo.
Personal anecdote: From the last housing bubble article that I commented on…..still, not one sale in our rural area. And still, no one has dropped their asking. Yesterday, I received our property tax assessment for 2025. Looks pretty good on paper but we could never sell for the price quoted.
To be honest, prices going flat in nominal terms for a long time wouldn’t be the worst outcome. It will be interesting to see how the decline in population growth affects markets, rents are already falling in most places, which lowers the floor for housing prices. Still lots of pain for people for another 2-3 years as people renew to higher rates, but so far not much overall stress in the market as unemployment remains low and wage gains remain solid.
Given the lower recent exchange rate vs US, I’ve seen people who bought places in the US when the CAD was at par selling their US places now and buying back in Canada, so the fx rate vs USD could lend some support to the market as well.