Home sales are picking up in the major metro areas across the country, signalling that the housing bottom may be in sight, say some analysts.
Sales in some markets are still down nearly 50% compared to the frenetic pace of a year ago, before the Bank of Canada began hiking interest rates. But compared to January, sales in Toronto and Vancouver are up 55% and 77%, respectively. In seasonally adjusted terms, sales in both cities are up 8% and 20%, respectively.
“The Canadian housing market correction has yet to run its course, but it’s gradually letting up,” noted RBC economist Robert Hague. “We think activity will hit bottom sometime this spring.”
Hogue said prices are likely to level out in the next several months, “provided the Bank of Canada is done raising interest rates.”
“We see the recovery phase starting slowly later this year as affordability issues and a weaker economy continue to hold back buyers,” he added. “The pace should progressively pick up in 2024 once the economy clears its soft patch, inflation returns to target and the Bank of Canada reverses part of the massive rate increases it’s imposed since March 2020.”
Ben Rabidoux of Edge Realty Analytics suggested prices are also likely to stabilize soon given the rise in sales.
“Sales are rebounding as anticipated, and I still think new listings will materialize in size in coming months,” he wrote in a note to subscribers. “But it won’t take many more months like we just saw (rising sales, falling inventory) to see prices stabilize and start to really move again.”
Greater Toronto Area
“It has been almost a year since the Bank of Canada started raising interest rates. Home prices have dropped over the last year from the record peak in February 2022, mitigating the impact of higher borrowing costs,” said TRREB President Paul Baron. “Many homebuyers have also decided to purchase a lower priced home to help offset higher borrowing costs. The share of home purchases below one million dollars is up substantially compared to this time last year.”
Source: Toronto Regional Real Estate Board (TRREB)
Greater Vancouver Area
“It’s hard to sell what you don’t have, and with new listing activity remaining among the lowest in recent history, sales are struggling to hit typical levels for this point in the year,” said Andrew Lis, REBGV director of economics and data analytics. “On the plus side for prospective buyers, the below-average sales activity is allowing inventory to accumulate, which is keeping market conditions from straying too deeply into sellers’ market territory, particularly in the more affordably priced segments.”
Source: Real Estate Board of Greater Vancouver (REBGV)
Montreal Census Metropolitan Area
“Despite an all-time low number of sales for a February and the sharp rise in the number of properties that have not found a buyer, most properties in the Montreal CMA are selling at the listed price, or even slightly above. This is particularly the case for condominiums,” said Charles Brant, Director of the QPAREB’s Market Analysis Department. “This means that despite longer selling times, the normalization of the transaction process and a return to market conditions less favourable to sellers, there is a pause in the price correction for the moment. This is mainly due to the fact that it is the more desirable and least numerous properties on the market that find buyers.”
Source: Quebec Professional Association of Real Estate Brokers (QPAREB)
Calgary
“While higher lending rates are impacting sales activity as expected, we are seeing a stronger pullback in new listings, keeping supply levels low and supporting some stronger-than-expected monthly price gains,” said CREB Chief Economist Ann-Marie Lurie. “Prices are still below the May 2022 peak and it is still early in the year. However, if we do not see a shift in supply, we could see further upward pressure on prices over the near term.”
Source: Calgary Real Estate Board (CREB)
Ottawa
“We’re going to see declines in transactions and prices when we compare current figures to last February—the height of the pandemic resale market activity,” said OREB President Ken Dekker. “On the other hand, with the Bank of Canada holding interest rates steady, prospective buyers have more budget certainty to work with as we head into the spring market.”
Source: Ottawa Real Estate Board (OREB)