Canada’s housing markets are experiencing more balanced conditions as the fall season approaches. The Bank of Canada’s interest rate hikes this summer have cooled the strong rally seen in the spring, leading to an increase in sellers in recent months. Local real estate boards in Vancouver, the Fraser Valley, Toronto, and Hamilton have reported a significant easing of demand-supply conditions. Calgary and Edmonton have also seen eased conditions, though to a lesser degree.
Rebalancing trends have indicated that the spring’s price rally is losing momentum in Ontario and British Columbia. Local boards have reported small month-to-month declines in the MLS Home Price Index in Vancouver, the Fraser Valley, and Toronto. However, property values in Calgary continue to appreciate at a brisk pace due to an influx of migrants and a thriving provincial economy.
Despite more choice becoming available to buyers, the fall season may see buyers remaining on the defensive in many parts of Canada due to high interest rates, ongoing affordability issues, and the looming possibility of a recession. The recovery is not expected to accelerate until interest rates go down in 2024.
In the Toronto area, home resales have slowed down in August, with buyers showing less interest in purchasing options due to high interest rates, poor affordability, and a softening economy. The sales-to-new listings ratio is closer to a buyers’ market than it has been since January, leading to lower prices.
In the Montreal area, an increase in homes for sale has boosted transaction flows. Despite more sellers entering the market, demand-supply conditions remain relatively tight, supporting property values to some extent. Prices for single-detached homes have seen modest gains, while condo apartment prices have remained relatively stable.
In Vancouver, the market has become more cautious, with buyers pulling back in response to the Bank of Canada’s rate hikes. Although an increase in the number of homes for sale should have reignited demand, the market has become more balanced, resulting in slightly lower prices.
Calgary continues to be a strong market, with home resales increasing and inventories remaining low. Demand remains high due to explosive population growth, leading to strong upward momentum in property values.
In conclusion, the Canadian housing market is experiencing more balanced conditions, with buyers remaining cautious due to high interest rates and affordability issues. Prices are stabilizing or experiencing modest gains in some areas, while Calgary continues to see strong growth in property values.
Disclaimer: The information presented in this article is intended as general information only and should not be considered as legal, financial, or professional advice. Consultation with a professional advisor is recommended for specific situations. The accuracy of the information presented is not guaranteed, and opinions expressed in the article may change. This article does not imply endorsement of any third parties or their advice, opinions, products, or services by Royal Bank of Canada or its affiliates. Sources: Bank of Canada, local real estate boards