Most Canadian real estate markets fell from their highs, as low as $355,000

Canada’s exuberant home buyers are suddenly less exuberant after interest rate hikes. Data from the Canadian Real Estate Association (CREA) shows that the composite benchmark price fell sharply in July. Prices fell by tens of thousands of dollars nationwide, with 9 out of 10 markets seeing declines. Markets have seen the value of a typical home drop to as low as $355,000 from peak appraisals. Not even a full year of gains was reversed in any real estate market – that’s how things got out of control.

Home prices in Canada fell by $27,000 last month

Real estate prices in Canada are down from the peak, with the typical home across the country taking a steep drop. The benchmark price fell to $782,300 in July, down 3.4% (-$27,400) from the prior month. From the peak reached in March 2022, prices are now down 9.9% (-$86,000). It’s only a hair’s breadth from being a technical correction, with 9 out of 10 (89%) of the ACI composite price indices down from the peak.

Canadian real estate prices are down in most markets

The price of a typical house (composite-benchmark) for Canadian real estate markets in July 2022 compared to the maximum valuation.

Source: CREA; Live better.

Canadian real estate markets fell $87,000 in July

Southern Ontario has led Canada’s housing boom for the past two years and is leading its bust. The largest monthly price declines across the country were all localized to the region. The 3 biggest dollar declines were Oakville (-$86,800), Mississauga (-$55,100) and Hamilton–Burlington (-$51,400). Absolutely monster moves lower, and worth pointing out that it was only a month. Price swings back and forth of this size are extreme volatility.

Southern Ontario real estate led July price decline

Southern Ontario real estate also leads the biggest decline in the dollar from the peak. The top three declines were recorded in Oakville (-$355,000), Mississauga (-$224,100) and Cambridge (-$217,000). The region has been leading higher and leading lower as price discovery takes hold. That said, prices have risen so much over the past few years that it has barely dented the gains made so far.

Monthly change in real estate prices in Canada

The evolution of the price of a typical house in Canada in July 2022.

Source: CREA; Live better.

Toronto and Vancouver real estate have avoided the extremes of change — the latter more than the former. The Greater Toronto Composite price fell 3.9% (-$47,400) in July and is now down 13.3% (-$177,500) from its peak. It narrowly escaped the lists above, with the fourth largest monthly price drop.

Greater Vancouver real estate has only started to contract, although it was quite steep for the month. A composite home in the region fell 2.3% (-$28,600) in July and is down 4.5% (-$57,400) from the peak. Vancouver saw a later peak than the typical peak across Canada, but it’s catching up fast.

Southern Ontario real estate sees fastest fall

Once again, Southern Ontario led the way with prices falling at the fastest rate last month. The fastest falling markets during the month were Huron—Perth (-6.6%), North Bay (-6.5%) and Oakville—Milton (-6.3%). Oakville is going through a tough time, isn’t it?

Canadian real estate markets have lost up to 22% since the peak

Southern Ontario also led the biggest declines from the peak as a rate, with the worst markets having already lost more than a fifth of their value. The three worst performing countries in terms of rates were Cambridge (-21.8%), Kitchener—Waterloo (-21.8%) and Oakville—Milton (-21.6%). As significant as these price declines were, none of these markets posted negative annual growth – which is how house price growth got out of hand.

A handful of Canadian markets hit new records

A handful of markets managed to reverse the trend and reach a new all-time high, despite tighter funding. At the all-time high, the fastest growing markets were PEI. (+1.9%), St John’s (+1.3%) and Sault Ste Marie (+0.9%). However, only six relatively small, low-volume markets recorded a new all-time high.

Real estate prices in Canada generally and very quickly fall. Areas like southern Ontario have seen the biggest booms and are now falling at breakneck speed. Even with these substantial declines, prices have still not returned to last year’s level. This highlights the unprecedented monetary policy mistakes to which organizations like the BIS attribute recent price growth.

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