ICYMI: Home prices are falling for first time in two years — here's where they are falling the most — via financialpost homeprices housingmarket welcomecorrection
Home sales dropped 12.6% across Canada from March to April and benchmark prices fell 0.6% in what one economist called “a remarkable turn of events.” “The demand fever in Canadian housing has broken and, who would have thought, all it took was a nudge in interest rates by the Bank of Canada to change sentiment,” said BMO senior economist Robert Kavcic.
The numbers were a far cry from the record-breaking upward flight of property values seen in the fall and winter. The 0.6% drop in the national MLS Home Price Index in April was among the weakest prints in the past decade, said Kavcic — and the first drop since April 2020. Prices are still up 23.8% from the year before, “but suffice to say that, in many markets, anyone who bought a home in the first quarter of 2022 is going to be looking at a value below purchase price for a while,” he said.Markets that saw the biggest price gains during the heady days of the pandemic are now seeing the biggest declines, many of them in South-western Ontario. RBC economist Robert Hogue says the MLS Home Price Index fell in London by -4% from the month before, in Cambridge by -3.9%, Brantford, -2.6%, Niagara region, -1.9%, Toronto, -1.8%, Kingston, -1.8%, Barrie, -1.5%, Kitchener-Waterloo, -1.1% and Hamilton, -1.1%.Vancouver’s price index increased by 0.3% but it was the smallest rise in almost two years, said Hogue. Meanwhile in the more affordable Atlantic Canada and the Prairies, prices continue to climb. The home price index was up 5.6% in Halifax-Dartmouth from the month before, Saint John, up 3.2%, Fredericton, 2.7%, and Moncton, 2.4%. Prices also rose moderately in Edmonton, up 1.4%, Regina, 1.2%, Calgary, 0.8%, Saskatoon, 0.6%. and Winnipeg, 0.4%.The Bank of Canada rate hiking cycle has proved a game changer — “turning what has been a tremendous tailwind into a stiff headwind for the market,” and RBC economists think April was the market peak. “We think the sizable drop in activity in April marks a turning point for the Canadian market with further cooling on the way,” wrote Hogue. But the economists view this as a welcome correction, after the unsustainable frenzy of the past two years. “We expect the burgeoning price correction seen in Ontario and parts of British Columbia to deepen and spread to other markets as market sentiment sours but it’s unlikely to morph into a meltdown. Positive demographic factors will provide a safety net against a hard landing,” said Hogue. Already there are signs of some markets returning to balance. The sales-to-new listings ratio reached balanced-market territory in April in Toronto, Hamilton, Niagara region, Kitchener-Waterloo and Windsor, RBC notes.
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