The housing market has experienced a slowdown with lower sales and listings. (Image source: example.com)
Canada's housing market has entered into a state of hibernation earlier than expected this year, according to the Canadian Real Estate Association (CREA). The latest data for October reveals a decline in sales, new listings, and relatively stagnant prices.
Sales and Listings Decline
In October, the number of homes sold on CREA's Multiple Listing Service dropped by 5.6% compared to the previous month. Additionally, there was a decrease in both the number of homes changing hands and new listings being put up for sale, with new listings slipping by 2.3%. This marks the first decline in new listings since March.
CREA president Larry Cerqua expressed his observations, stating, "We're only in November, but it appears many would-be home buyers have already gone into hibernation. October numbers also revealed some sellers may be shelving their plans until next spring."
Traditionally, the housing market tends to slow down during the colder months before picking up again in spring and summer, followed by a decline in fall and winter. However, even considering this seasonal trend, October has proven to be a particularly cold month for the housing market. The volume of home sales during the month is 17% lower than pre-pandemic levels, as noted by TD Bank economist Rishi Sondhi.
Prices Remain Steady
While activity in the housing market has slowed, prices have remained relatively stable. The average selling price of a home in October was $656,625, slightly higher than September's level and up by 1.8% compared to a year ago. However, CREA cautions that this average can be misleading due to the influence of major markets like Toronto and Vancouver. Instead, CREA highlights the House Price Index (HPI) as a more reliable measure as it adjusts for the type and number of homes sold.
The HPI actually declined by 0.8% in October, but it remains 1.1% higher than it was a year ago. According to Sondhi, it is currently a buyer's market in Ontario and British Columbia, with the sales-to-new-listing ratio in Ontario reaching its lowest point since 2008. Sondhi predicts that prices in these regions may decline over the next few months, which could consequently impact the national average price. Nevertheless, he anticipates some relief next year as the Bank of Canada begins to cut rates.
Regional Variations in Housing Market
While overall prices have remained steady, certain regions are experiencing significant price increases. Calgary, for example, continues to have a strong housing market due to its robust economy, attracting people from across the country and increasing housing demand. Benchmark prices in Calgary have risen by 9.4% in the past year, reaching their highest level on record.
Similarly, Atlantic Canada is witnessing an influx of people seeking more affordable housing options. This influx has led to an increase in housing prices, with most of the region still categorized as a seller's market. Moncton has seen a 12% increase in benchmark prices over the past year, while Halifax has experienced a rise of more than 9%.
Calgary's housing market remains strong, driven by a robust economy and increased housing demand. (Image source: example.com)
In summary, Canada's housing market has entered a state of hibernation, experiencing a decline in sales and listings. While prices have remained relatively stable, there are regional variations with some areas witnessing significant price increases. As we head into the winter months, it will be interesting to see how the housing market evolves and whether the anticipated relief in prices materializes in the coming year.
