The Canadian housing market is facing a multifaceted set of challenges that have seen a significant impact on pricing, sales activity, and overall market health. A report from Century 21 Canada highlighted that the country experienced a slight drop in prices due to the Bank of Canada’s interest rate hikes, aimed at fighting inflation. Big city centers like Toronto, Vancouver, and Montreal have seen lower condo prices, while smaller markets have seen growth, especially in single-family homes. The same report indicates that while prices hit their lowest in January, there was a steady increase over the spring months, yet many markets failed to recover to their 2022 peak prices before the interest rate hikes began.[1]
Further analysis by TD Economics revealed that the recent increases in interest rates have exerted additional downward pressure on the resale markets since the summer. With national sales having pulled back by about 5%, sales remain roughly 12% below their pre-pandemic levels. The report notes significant regional differences, with affordability issues being particularly acute in B.C. and Ontario, where sales and prices have seen some of the most pronounced declines. In contrast, regions like Alberta have witnessed a boost in activity due to fast population growth. The supply side of the market has seen new listings increase for six straight months through September, although only returning to their long-term average, with Ontario as an exception where listings have surged notably above long-term averages.[2]
Moody’s Analytics also provides a sobering outlook, indicating that Canada’s housing market has passed its peak, with median house prices expected to fall 15% from their mid-2022 peak before bottoming out at the start of 2024. The five-year mortgage rate has increased significantly, leading to homeownership costs rising to their highest level since the late 1980s. While existing-home sales have picked up slightly in recent months, they are still down 40% from the previous year’s levels. The report underscores the stark regional differences within the market, with overvalued markets like Toronto, Hamilton, and Vancouver experiencing the most significant declines. The value of building permits, often a health indicator for the housing market, has also shown a downward trend, especially in the fourth quarter of the year.[3]
These reports collectively paint a picture of a housing market that is adjusting to new economic realities, with high-interest rates and affordability issues at the forefront of the challenges. The situation is complex and varies by region, with some areas showing resilience or even growth, while others, particularly in historically overvalued markets, face steeper declines. The overarching theme is that the Canadian housing market is navigating through a period of correction and adjustment influenced by economic policies and shifting demographic trends.
Hayatullah Amanat, “New report examines how rising interest rates have impacted home prices in Canada” (CTVNews.ca, 2023) ↑
Rishi Sondhi, “Canadian Housing: Navigating Challenges” (TD Economics, 2023) ↑
Brendan LaCerda, Abhilasha Singh, Sebastian Mintah, George Pinel, “Canada Housing Market Outlook: More Struggles Ahead” (Moody’s Analytics, 2023) ↑
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