The Canadian housing market continued its slowdown last month, with home sales falling by more than a third from last year’s boom and prices down nearly 10% since then.
The Canadian Real Estate Association, which represents real estate agents, said in a release on Tuesday that the national average sales price for homes sold in October was $644,643. This is down 9.9% compared to the same month last year and further down from his February 2022 peak of $816,720.
That was before the Bank of Canada launched an aggressive rate hike campaign to keep inflation in check. Since then, the central bank has raised its base rate six times, and the impact on the housing market has been dramatic.
Average selling prices have fallen more than 20% since February, with prices falling in nearly every market across the country or staying flat in a few markets.
CREA says the average sales price can be misleading, but it’s easily distorted by sales in big, expensive markets like Toronto and Vancouver, so it uses another number, known as the Home Price Index. It advertises itself as a better measure of the overall market.
HPI for October was $756,200. This is his 1.2% decline for the month, the smallest decline since June, according to CREA. However, it is down 8.2% from 6 months ago.
Prices are down from their peak, but higher interest rates mean housing isn’t really that affordable.
One Buyer’s Regret
Sid Joshi knows this firsthand. He bought a townhouse in the Ottawa suburb of Stitzville in his February for about $400,000. Before the pandemic, the house he bought probably only cost about $300,000, but he was brave enough to buy because he wanted to start building his wealth, and he could easily pay off the mortgage. rice field.
“The interest rate was 1.2% when we bought the condo, so we still managed to make the monthly payments. [at] It’s $1,400 a month,” he said.
However, the loan he agreed to was at a variable rate, and within weeks, his payments began to increase with each Bank of Canada rate hike.
He’s currently paying over $2,100 a month, and to make matters worse, based on recent sales, he thinks his house might only bring in $360,000.
“I am very disappointed. I regret buying this property,” he said. “I should have waited.”
His story will be familiar to many Canadians who bought during the pandemic, when record-low interest rates poured gasoline into a raging housing market, pushing prices up.
October’s data clearly shows the trend going in the opposite direction, with weaker sales and lower prices. But CREA says under the headline numbers there’s reason to think the worst slowdowns might be in the rearview mirrors.
“October provided a month’s worth of data that suggests the slowdown in the Canadian housing market is coming to an end,” CREA economist Sean Cathcart said. “Sales actually increased in September and October, and the monthly price decline narrowed for the fourth straight month.”
Some think the optimism is a bit exaggerated. Sales may have edged up from his September lows, but he was still about 15% below his 10-year pre-corona monthly average.
“This was the quietest unit volume since the economy came out of recession in 2010,” BMO economist Robert Kavcic said.
“Tumbleweed continued to storm the Canadian housing market in October,” he said. “But it could be worse.”