The Roller Coaster Ride of Canadian Home Prices

Home Prices in Canada Experience Another Drop It seems like the roller coaster ride for Canadian home prices continues unabated. According to the Home Price Benchmark Index for single-family houses by the Canadian Real Estate...

Home Prices in Canada Experience Another Drop

It seems like the roller coaster ride for Canadian home prices continues unabated. According to the Home Price Benchmark Index for single-family houses by the Canadian Real Estate Association (CREA), home prices in Canada dropped by 1.7% in November from October. This marks the fifth consecutive month of month-to-month declines, bringing the year-over-year gain down to just 0.9%[^1^].

Since the peak-frenzy in March 2022, the benchmark price has fallen by a staggering 17.2%, or $162,000 in Canadian dollars, to a level of $788,200. Interestingly, this is the same level it reached in September 2021, on its way up[^1^].

The Bank of Canada's Role

The easy money era has come to an end, with the Bank of Canada hiking its overnight rate to 5.0% in July and keeping it there. The BoC had regularly pointed to the skyrocketing home prices in its pronouncements over the past two years, as prices reached unprecedented levels of craziness[^1^].

And now, the Bank of Canada must face another housing issue: the worst rent inflation since 1983. It seems that when one problem is solved, another arises, creating a continuous cycle of challenges for the central bank[^1^].

The Impact Across Different Markets

As with any fluctuating market, some areas have fared better than others. In the Greater Toronto Area (GTA), the benchmark price for single-family houses dropped by 2.0% in November from October, continuing the downward trend. Since its peak in February 2022, the benchmark price in GTA has plunged by 18.9%, or $300,000, and is now back to where it was in September 2021[^1^].

In the Hamilton-Burlington metro, part of the Greater Toronto and Hamilton Area, the single-family benchmark price also experienced a decline of 3.0% in November. This market has seen a significant drop of 25.4%, or $294,700, since its peak in February 2022[^1^].

The Greater Vancouver area also witnessed a slight dip of 0.8% in the benchmark price for single-family houses, bringing it to $1.985 million. However, compared to the previous year, prices have still increased by 6.7%[^1^].

Other markets like Victoria, Ottawa, Montreal, Halifax-Dartmouth, and Quebec City have experienced varied fluctuations in their single-family benchmark prices as well. Each market has its own unique story, with some seeing a decline while others have managed to maintain positive year-over-year gains[^1^].

A graph depicting the head-and-shoulders chart of the housing market A graph depicting the head-and-shoulders chart of the housing market.

Conclusion

The Canadian housing market continues its roller coaster ride, with prices fluctuating and markets responding differently. It's a game of ups and downs, with central bank policies and market forces shaping the outcome. As we navigate this unpredictable terrain, it's essential to keep a close eye on the trends and be prepared for the unexpected twists and turns that lie ahead[^1^].

The Bank of Canada building The Bank of Canada building.

[^1^]: Original Article by Wolf Richter for WOLF STREET: Wolf Street.

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