Canada's housing market still in a slump
Canada’s housing market is still in a slump, with fewer properties being listed and fewer sales being made, according to new monthly data from the Canadian Real Estate Association (CREA).
The data, released Wednesday by CREA, showed that Canadian home sales are continuing to see a downward trend, falling by 5.6 per cent in October.
“We’re only in November, but it appears many would-be home buyers have already gone into hibernation,” Larry Cerqua, chair of CREA, said in a release. “The October numbers also revealed some sellers may be shelving their plans until next spring.”
The number of new listings also fell by 2.3 per cent in October compared to the previous month.
This meant that the sales-to-new listings ratio slipped to 49.5 per cent, which CREA says is a “10-year low.”
The sales-to-new listings ratio is a way that real estate experts analyze the relationship between how many homes sold in a given time period versus how many new listings were added to the market. A higher percentage for this ratio indicates that it’s a seller’s market, meaning it’s a good time to sell because buyers will be competing to secure your listing. A lower percentage indicates a buyer’s market, meaning it’s a good time to buy, because there are more sellers than there are buyers. A ratio that hovers around the middle of the percentage scale indicates a more balanced market.
According to CREA, Canada’s “long-term average” sales-to-new listings ratio is around 55 per cent, and it spiked to 67.9 per cent in April.
Although home sales are continuing to dip this fall, the housing market was still more active this October than it was the previous year—the actual number of home sales in October was 0.9 per cent above what it was in October of 2022, according to CREA.
Month by month data found that average home prices declined by 0.8 per cent this October compared to the previous month.
“While price declines are still mainly an Ontario phenomenon, home prices are also now starting to soften in parts of British Columbia,” the release stated.
However, the prices are up when compared to yearly data. Nationally, the average home price was around $656,000 in October, according to CREA, an increase of 1.8 per cent compared to October 2022.
A graph comparing the average residential price in different regions of Canada in October 2023 compared to October 2022 showed that residential pricing has increased across 10 provinces, with only Newfoundland and Labrador seeing a two per cent drop in pricing.
The biggest increase in the average residential price was in New Brunswick, where the average price of a home in October 2023 was more than 12 per cent higher than what it was in October 2022.
According to CREA, at the end of October 2023, there were enough properties on the market that it would take 4.1 months to sell them all at the current pace of sales—a metric known as “months of inventory.”
This is up from the low of 3.1 months of inventory in May, but is still below the long-term average for Canada, which is nearly five months of inventory.
“We know housing demand is extremely high all across the country, but October’s resale data was further confirmation that it probably won’t be manifesting itself in the existing home market for the remainder of this year and likely not until spring 2024 at the earliest,” Shaun Cathcart, CREA’s senior economist, said in the release.
“The rebound in activity this past spring was an example of what we might see next year. It will really come down to whether the Bank of Canada has to increase interest rates again, or whether by next March it’s simply a matter of how soon we’ll see the Bank make its first cut.”
