Home sales in Canada had their worst January since 2009: report

OTTAWA –

Home gross sales in Canada posted their worst begin to the yr since 2009 as January gross sales fell 37.1 per cent in contrast with the beginning of 2022 and costs continued to fall, the Canadian Real Estate Association mentioned Wednesday.

Home gross sales for the month amounted to twenty,931 and got here because the January gross sales additionally fell three per cent in contrast with December.

The transfer decrease to begin the yr gave again the small good points made in December and CREA mentioned it indicators a scarcity of readability round whether or not the market has hit or is nearing the underside.

“Hope springs eternal that housing activity may be close to a bottom, but we suspect that the market is still digesting the incredibly aggressive rate hikes of the past year,” Douglas Porter, BMO Capital Markets’ chief economist, mentioned in a be aware to buyers.

Porter is in search of additional worth softness nationally within the months forward as a result of within the seven previous housing corrections in Canada, it took three years on common for costs to hit the underside and he provides we’re only one yr from the height of final February.

The precise common worth in January sat at $612,204, an 18.3 per cent dip from $749,437 throughout the identical month final yr, CREA mentioned. On a seasonally adjusted foundation, the common worth in January was $620,605, down 1.8 per cent from December.

The Bank of Canada has raised its key rate of interest eight consecutive instances since March 2022, driving mortgage charges greater.

However, when finishing up the latest charge hike, Bank of Canada governor Tiff Macklem mentioned the financial institution will pause and assess the influence of upper charges on the financial system and inflation.

Higher charges have weighed on the housing market with sellers not eager to listing properties that may fetch far lower than their neighbours’ did months in the past and consumers deterred from making purchases as a result of their borrowing prices at the moment are steep, at the same time as dwelling costs slide.

Porter’s forecast predicts that by the point the present financial cycle is full, dwelling costs may have fallen by between 20 and 25 per cent from their peak. They had already dropped 10 per cent by early January.

“While the Bank of Canada may be done hiking rates (emphasis on ‘may,’ as the market is now giving high odds to one more move), we suspect that prices have not fully adjusted to the … rate hikes over the past year,” he mentioned.

In P.E.I., the common dwelling worth was down 10.2 per cent on a month-over-month foundation, whereas they slid three per cent in Ontario, 2.9 per cent in Alberta and a couple of.6 per cent in B.C.

In taking inventory of the declines, TD Economics’ Rishi Sondhi mentioned in a be aware to buyers that “markets had a lot to contend with last month.”

Along with the rate of interest hikes, he pointed to the implementation of a overseas consumers’ ban and an anti-flipping tax.

“As such, falling sales and prices last month are not much of a surprise,” he mentioned.

Porter agreed.

“On the sales front, the ongoing weakness was well flagged by preliminary results from the major cities, and it simply extended a trend of heavy-duty declines from unusually strong activity during the pandemic,” he mentioned.

Earlier this month, the Quebec Professional Association of Real Estate Brokers mentioned Montreal’s January dwelling gross sales fell to a degree not seen since 2009 because the market slowdown continued.

The Real Estate Board of Greater Vancouver discovered January dwelling gross sales have been greater than halved from the yr earlier than and down 21 per cent from December.

“Moving forward, housing activity could bottom sometime in the first half of this year, supported by a solid job market, robust population growth and the likelihood that yields grind lower,” Sondhi mentioned.

“Moreover, the level of new listings remains low, offering no signal (yet) that forced selling is meaningfully pushing up supply.”

The variety of newly listed properties was up 3.3 per cent on a month-over-month foundation in January, CREA mentioned.

It famous that regardless of the rise, nationally, new listings remained traditionally low with new provide in January, the bottom degree for that month since 2000.

With new listings up and gross sales down in January, CREA mentioned sales-to-new listings eased again to 50.7 per cent.

This report by The Canadian Press was first printed Feb. 15, 2023.