Has the Canadian housing market experienced a slowdown? Reports of fewer bidding wars and offers have surfaced over the month of April: Homes are still selling for well over asking, but at a slightly less fraught pace than they did in record-breaking March, agents say.
Their observations are proving more than just a hunch; the April numbers from the Canadian Real Estate Association find that home sales fell in two thirds of all markets, led by a 6.7-per-cent decrease in the Greater Toronto Area, and down 1.7 per cent across the country.
However, fewer sales haven’t led to any price relief for buyers. The average home price rose 10.4 per cent year over year to $559,317, mostly driven by real estate in the GTA, Greater Vancouver and Fraser Valley – up to $150,000 would be knocked off the national average with those markets stripped out of the equation.
That these markets are driving national numbers is a long-standing trend, even when faced with rules designed to calm price growth and improve affordability.
British Columbia’s Lower Mainland has more than recovered from the fallout from last summer’s foreign buyer tax with sales uo 15.6 per cent in Vancouver and 18.3 per cent in the Fraser Valley month over month, but that strength isn’t reflected across all of western Canada.
“Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close,” said CREA President Andrew Peck. “Meanwhile, sales are up in Calgary and Edmonton from last year’s lows and trending higher in Ottawa and Montreal. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to.”
- BC’s Victoria region continues to experience hot demand, with price increases in the +20 per cent range
- Prices are down in oil country and the breadbasket; Calgary homes sold for 0.9 per cent less, Saskatoon saw a 2.6-per-cent dip, while Regina experienced a very slight 0.4-per-cent increase.
- Prices throughout eastern Canada continue to steadily rise, up 4 per cent in Ottawa, 3.7 per cent in Montreal, and 4.8 per cent in Greater Moncton
The Impact of New Housing Rules in Ontario
While CREA pointed out it’s too soon to tell whether the new Ontario Fair Housing Plan will have its desired effect on the region’s market, the 16 surprise changes – including a foreign buyer tax, rent controls, and the potential to tax empty homes – have clearly resonated with buyers and sellers in the short term.
The Greater Toronto Area experienced the greatest decrease in activity leading up and following the provincial Liberals’ revelation, which CREA says contributed to an unseasonable slowdown and a surge of new homes for sale.
“Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto,” said Gregory Klump, chief economist at CREA, adding that buyers in extremely competitive areas enjoyed an increase in choice as a result.
“The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamiton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage,” he said.
Avoiding Collateral Damage
Klump goes as far to say that a downturn in sales in each area could be considered a cooldown – though the province will need to tread carefully to avoid unwanted pain in less heated markets.
“Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes in communities where the housing market is well balanced or already favours buyers,” he said.
A Surge in Listings Won’t Balance Market
While the number of homes for sale rose significantly in some markets – a whopping 36 per cent in the GTA, and an average of 10 per cent across Canada – the nation’s market remains in favour of sellers.
The sales to new listings ratio, which determines if the market is balanced, fell to 60.1 per cent from 67.3 per cent in March (a ratio between 40 – 60 is considered balanced). While it looks close from a national perspective, the ratio remains well above 60 in just over half of individual markets, reports CREA, and especially in Greater Vancouver and in the GTA.
The amount of “inventory” – which measures how long it would take to completely liquidate the available homes for sale in Canada – sat at 4.2 months in April, up from 4.1 month over month. In the hottest markets, though, inventory remains at or below one month.
Two-Storey Houses See Greatest Price Growth
While prices rose for every home type, it’s clear buyers are still in pursuit of the “great Canadian real estate dream” – two-storey, single-family homes saw the greatest annual price growth, at 21.8 per cent.
Townhomes came in second at 19.9 per cent, apartment units at 18.8 per cent, while one-storey family homes rose 17.2 per cent. Benchmark prices were up in 11 of 13 housing markets.