Rosalind Evans
The Canadian housing market has experienced a noticeable shift, with fewer home sales and lower average housing prices compared to last year. The Canadian Real Estate Association (CREA) has responded by lowering both sales and price forecasts for 2024 and 2025, reflecting the market’s current state.
June 2024 marked a significant decline in real estate activity, with both sales and housing prices dropping compared to June 2023. However, there was a slight improvement in sales from May 2024 to June 2024, with home sales activity in the Canadian Multiple Listing Service (MLS) increasing by 3.7%. Despite this monthly uptick, sales were still 9.4% lower than in June 2023.
The average home price in Canada for June 2024 stood at $696,179, representing a 1.6% decrease compared to the same month last year. This decline is a key indicator of the broader trend within the national housing market. CREA’s senior economist, Shawn Cathcart, attributed this trend to the recent interest rate cuts, which have provided some stimulation to sales, albeit not enough to significantly shift market dynamics.
The overall story for Canada’s housing market is one of stagnation. According to BMO Capital Markets’ senior economist, Robert Kavcic, the market is currently not very active, which could be advantageous for potential buyers who have faced intense bidding wars in previous years. Nationally, both sales and prices are largely flat, with significant regional variations.
Different regions in Canada exhibit distinct real estate market conditions. In major cities like Toronto and Vancouver, housing prices are falling, while cities such as Calgary, Edmonton, Montreal, and areas in Atlantic Canada are experiencing rising prices due to better affordability. This regional disparity highlights the complex nature of the Canadian housing market, where local factors heavily influence real estate trends.
Mortgage costs remain a critical factor affecting home affordability. Despite recent interest rate cuts, the reduction in mortgage costs has not been substantial enough to significantly alter the cost of homeownership for many Canadians. The national outlook suggests that home prices will continue to remain stable for the rest of the year, with insufficient interest rate relief to make a noticeable impact on affordability.
CREA has revised its forecast for the average home price in 2024, now predicting a 2.5% increase instead of the previously anticipated 4.9%. This adjustment is attributed to a “quiet spring” and an increase in the supply of homes as more sellers entered the market while many buyers remained hesitant. This trend aligns with observations from Toronto Realtor Anya Ettinger, who noted an oversupply of condos sitting on the market in her region. However, semi-detached homes are still experiencing multiple offers, indicating selective demand within the market.
At the end of June, there were approximately 180,000 properties listed for sale across Canada, an increase of 26% from a year earlier. Despite this rise, the number of listings remains below the historical average of around 200,000 for this time of year. This inventory level reflects the broader market dynamics, where supply is increasing but demand is not keeping pace, leading to a more balanced yet subdued market.
The Canadian housing market is currently characterized by lower sales and prices compared to last year, with significant regional variations and a flat overall trend. Interest rate cuts have provided some relief, but not enough to drive a substantial increase in affordability. The revised forecasts from CREA indicate a more modest increase in home prices for 2024, as the market adjusts to new conditions and potential buyers navigate the evolving landscape. As the year progresses, the interplay between supply, demand, and economic factors will continue to shape the trajectory of the Canadian real estate market.
