Home Prices In Canada Have Fallen For Two Consecutive Months, A First Since 2019

The national benchmark price was $839,100 in December 2021, representing a month-over-month decline of $16,900 (2.0%) and a year-over-year gain of $138,500 (19.8%). For more than two years, the national benchmark home price in Canada has risen every single month. The last time prices declined was in April 2020 and prior to this, only a minor correction was seen in the summer of 2019. The most recent meaningful declines were in 2018 when prices declined for nine consecutive months and in 2017 when prices declined for eight consecutive months - both of which resulted in price corrections of approximately 5%.


While down by $29,000 from the peak in February 2022, the national benchmark home price is still up by $277,000 since the onset of the pandemic in April 2020. Remember that even in April 2020 the housing market was generally recognized as being unaffordable - when the national benchmark home price was $556,000!


Cities in the lower to middle price points have not yet seen significant price declines as a result of rising interest rates. Unless home prices fall enough to offset the impact of rising interest rates, we may still see migration from more expensive cities to more affordable options. The most expensive city (Oakville-Milton) saw prices fall the most, followed by Cambridge and Kitchener-Waterloo.


Looking at the Greater Toronto Area specifically, we can see a rapid decline each week in the percentage of sales going above the list price. Buyers are realizing that the market has changed and it is no longer a necessity to bid above the list price. With the number of active listings still historically low, it is not yet a buyer's market but trending towards being more balanced.


Consumer sentiment is something that can change very quickly and can amplify other factors affecting the housing market. When interest rates were slashed at the onset of the pandemic and buyers were re-evaluating their home preferences, housing demand naturally increased. However, sentiment rose to the point where many thought they would never have a chance to enter the market again, and parents began buying homes for their kids and future children. This heightened consumer sentiment was a key reason why prices rose approximately 50% in two years, and a swing in consumer sentiment in the opposite direction is what could bring home prices back down just as quickly. To stay on top of the ongoing changes in the housing market, we recommend using our housing stats tool at the following link (free, no signup needed): https://www.thehabistat.com/analyze-benchmark-home-prices


If you are a realtor in the Greater Toronto Area, we have a specialized tool for you to follow weekly trends in whichever city or community you work in. Learn more at the following link: https://www.thehabistat.com/gta-dashboard