The Canadian real estate market finished 2023 with a more than 20% month-over-month drop in sales as buyers and sellers retreated to the sidelines, but with more optimism now in the air it seems the market is showing signs of recovery. According to the Canadian Real Estate Association, national home sales were up 12.9% month-over-month and 22% year-over-year in January.
“Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years,” said Shaun Cathcart, CREA’s Senior Economist.
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Increased Market Activity Boosting Sales Growth
As more buyers entered the market in January, many major cities experienced notable month-over-month increases in home sales. Ontario buyers were especially active last month, with month-over-month sales increasing by 34.7% in Hamilton-Burlington, 28.1% in London & St. Thomas, and 22.6% in the Greater Toronto Area. Outside of Ontario, Calgary and Edmonton also experienced major improvements in sales, with Calgary home sales up 19.4% month-over-month and Edmonton home sales up 18% month-over-month.
The Bank of Canada’s January announcement to hold interest rates at 5% is likely spurring much of this buyer activity as the likelihood of further rate hikes fades. But despite increased buyer activity, home prices stayed flat or even decreased across markets in Canada. The national benchmark price dropped by 0.4% from $710,300 in December 2023 to $707,800 in January 2024. Of the major markets, Kitchener-Waterloo experienced the largest increase in the benchmark price, rising month-over-month by 1.3%, however, most markets experienced less than a 1% increase.
Motivated buyers can benefit from these flattening prices and may be able to find deals in in-demand markets like Vancouver, Victoria, and Quebec CMA where home prices are still coming down.
New Listings Up But Market Conditions Remain Tight
According to the not seasonally adjusted data, national new listings were up by a whopping 102.5% month-over-month and 10.5% year-over-year, but this is still close to the lowest level experienced since last June. The number of new listings on the market haven’t been able to keep up with rising sales, which resulted in the sales-to-new listings ratio increasing to 58.8% in January. That makes conditions even tighter than December’s 57.8% sales-to-new listings ratio.
Several markets experienced month-over-month new listing increases of more than 100%, including Vancouver, Kitchener-Waterloo, Greater Toronto, Halifax-Dartmouth, and Ottawa. However, markets in the Prairies like Edmonton, Calgary, and Saskatoon experienced much smaller increases. This means conditions in these markets are especially tight, with Edmonton, Calgary, and Saskatoon all having sales-to-new listings ratios of more than 62%.
Market conditions vary from region to region however, so if you’re thinking to enter the spring market, it’s important to speak with a local real estate agent to learn about conditions in your specific area. If you’re ready to talk about your 2024 real estate goals, give us a call today!
