Canada Housing Market Outlook: Are Prices Expected to Decline in Canada?

The most recent statistics from the Canadian housing market suggest a promising move towards stability. Stay abreast of the latest developments in the Canadian real estate landscape. In this report, we delve into the key highlights, trends, and expert insights to offer a comprehensive perspective on the housing market. From variations in home sales to price indices, we analyze the data that holds significance.

The Present Condition of the Canadian Housing Market

In November 2023, the Canadian housing market exhibited subtle shifts in national home sales, as per data released by the Canadian Real Estate Association (CREA). The statistics indicated a slight 0.9% month-over-month decrease in national home sales. In comparison to November 2022, the monthly activity, not adjusted for seasonal variations, was 0.9% lower, signalling a stable albeit slightly subdued market.

Newly Listed Properties and Market Dynamics

Newly listed properties experienced a reduction, with a 1.8% month-over-month decline. This trend, combined with the slight decrease in home sales, indicates a cautious attitude among buyers and sellers in the present market. Despite a 1.1% month-over-month decline, the MLS® Home Price Index (HPI) maintained a 0.6% year-over-year increase.

Insights from CREA and Market Observers

Larry Cerqua, Chair of CREA, conveyed optimism regarding the market stabilizing into a balanced state, hinting at a potential soft-landing scenario. He remarked, “I wouldn’t expect anything too headline-grabbing from the resale housing market for the next few months,”  underlining the importance of consulting a REALTOR® in the current climate.

Shaun Cathcart, Senior Economist at CREA, observed that while some buyers opted to wait until spring, a notable number of sellers attempted to list their properties during the autumn months. With expectations of a more active spring market fueled by potential interest rate reductions, many sellers are reassessing their strategies and gearing up for the coming year.

Market Metrics and Inventory Status

In November, the sales-to-new listings ratio experienced a slight uptick to 49.8%, compared to 49.4% in October. This change, the first since April, signifies a delicate equilibrium between supply and demand. The inventory levels, measured in months, reached 4.2 by the end of November, showing a minor rise from 4.1 in October but remaining below the long-term average of nearly five months.

Regional Disparities in Housing Prices

The Aggregate Composite MLS® HPI experienced a 1.1% month-over-month decline, indicating a softer market trend post-summer. Notably, price decreases were more prominent in Ontario, contrasting with regions such as Alberta, Saskatchewan, New Brunswick, Prince Edward Island, and Newfoundland and Labrador, which sustained price upticks. The national average home price in November 2023 stood at $646,134, showcasing a 2% year-over-year rise.

Are Canadian Home Prices on the Decline?

Although the Aggregate Composite MLS® HPI witnessed a 1.1% month-over-month decrease, it’s important to recognize that this may reflect softer market conditions rather than a substantial price drop. Notably, price declines are more pronounced in certain regions like Ontario, while other areas continue to observe price growth. Overall, the market is undergoing fluctuations, emphasizing the importance for both buyers and sellers to stay informed about regional trends.

Is the Present Moment Ideal for Purchasing a Home in Canada?

Considering the current state of a balanced market and the expectation of a potentially more dynamic spring market, it might be a prudent time for buyers to explore their housing options. The 2% year-over-year rise in the national average home price indicates a market that is relatively stable with moderate price appreciation. As always, seeking advice from a REALTOR® for tailored guidance based on individual circumstances is advisable.


Canada Housing Market Forecast: Will it Crash or Not?

For November 2023, the national average home price stands home price sits at $646,134, with 35,013 home sales—a notable 16% increase year-over-year. The MLS Benchmark Price, representing the price of a “typical” home in Canada, reached $735,500 during the same period.

The recent decline in home prices in specific regions can be attributed to the Bank of Canada’s rate hikes in June and July 2023, resulting in a cumulative increase in interest rates by 50 basis points. This rise has elevated borrowing costs, impacting home affordability and subsequently dampening demand.

Although there were no further rate hikes in November 2023, forecasts indicate that relief from the current high rates may not materialize until early 2024.

Regional Contrasts in Home Prices

With the exception of Manitoba, where prices have declined, home prices have risen year-over-year across all provinces. Monthly declines in home prices are evident in seven provinces, highlighting the influence of market dynamics on regional housing trends.


Market Dynamics: Seller’s or Buyer’s Market?

Canada’s Sales-to-New-Listings Ratio (SNLR)

November 2023 is recorded at 49.8%, signalling a balanced market. A balanced market denotes a state of equilibrium between buyer demand and property supply, fostering competition among buyers for available properties. This suggests that neither buyers nor sellers hold a substantial advantage, rendering it a more neutral market environment.

Insights Across Provinces

  • Alberta: The SNLR has climbed from 74% to 77%, signalling a seller’s advantage.

  • Saskatchewan: Holding steady with an SNLR of 73%, the market continues to favour sellers.

  • Manitoba: The SNLR has increased from 65% to 67%, highlighting a seller’s market.

  • Ontario: Transitioning from a buyer’s to a more balanced market, Ontario’s SNLR rose from 37% to 44%.

  • Quebec: Showing improvement, the SNLR in Quebec increased from 52% to 59%.

  • Nova Scotia: Witnessing a significant surge, Nova Scotia’s SNLR jumped from 64% to 80%.

  • New Brunswick: Marking a substantial surge from 77% to 91%, New Brunswick reflects a robust seller’s market.

  • Newfoundland: Exhibiting growth from 67% to 81%, Newfoundland also showcases a strong seller’s market.

The prevailing trend across most provinces indicates a robust sellers’ market, underscoring higher demand for homes compared to available listings. These market dynamics underscore the ongoing impact of interest rates on housing affordability and demand in Canada.

Benchmark Prices Across Canada (November 2023)

Analyzing benchmark home prices in the Canadian housing market for November 2023 unveils intriguing trends, showcasing variations on both a monthly and annual basis. Let’s delve into the specifics for each province:

  • British Columbia, with a benchmark price of $971,400, British Columbia witnessed a 1% monthly decrease but still noted a 4% annual increase.

  • Alberta Alberta, boasting a benchmark home price of $486,200, exhibited a marginal 0.1% monthly increase alongside a significant 8% annual growth.

  • Saskatchewan, with a benchmark price of $324,400, saw a 1% monthly reduction while maintaining a 2% annual increase.

  • Ontario’s housing market recorded its benchmark price at $861,200, marking a 2% monthly decline and a slight 0.5% annual decrease, making it the sole province to witness a lower benchmark price this month compared to last year.

  • In Quebec, the benchmark home price stood at $466,000, showing a 0.5% monthly decrease yet achieving a commendable 4% annual growth.

  • Nova Scotia’s benchmark price of $390,000 reflected a 3% monthly reduction, yet it still managed a commendable 6% annual growth.

  • New Brunswick presented a benchmark price of $287,900, with a 2% monthly decrease, contrasting with a notable 7% annual increase.

  • PEI, boasting a benchmark price of $361,800, registered a 1% monthly decrease and a commendable 4% annual increase.

  • Lastly, Newfoundland marked its benchmark price at $291,300, experiencing a slight 0.4% monthly contraction while maintaining a commendable 4% annual growth.

Is a Canadian Housing Market Crash?

Based on current data, there is no indication of an imminent housing market crash. Although certain provinces have experienced fluctuations, most still show positive annual growth. Factors like interest rates and economic conditions will heavily influence the market’s stability in the foreseeable future.


Canadian Real Estate Bubble

The Canadian real estate bubble pertains to a notable increase in Canadian property prices witnessed from 2002 to the present. Many analysts have labelled this phenomenon as a real estate bubble.

Several factors have contributed to the Canadian housing bubble:

  • Housing prices exceeding income levels

  • Continuously low-interest rates since the 2008 financial crisis

  • Surge in the mortgage debt service ratio to concerning levels

  • Limited access for Canadian homebuyers to secure long-term fixed-rate mortgages

  • Canadian private debt as a percentage of GDP surpassed that of Japan during its early 1990s crisis

  • Canadian borrowers are obligated to renew their mortgages every five years

  • Provinces and municipalities accountable for land-use planning, zoning, and permitting

  • Participation of real estate investors

  • Involvement of foreign buyers

Experts warn that Canada may be on the brink of experiencing one of the most significant housing bubbles in history, forecasting a potential 24% drop in Canadian home prices. Nonetheless, there is optimism that 2024 will usher in greater stability to the housing market. The anticipated decrease in mortgage rates is projected to largely offset any significant fluctuations, resulting in predominantly stable home prices throughout the year.

This article is not intended for making real estate or financial decisions. Certain information in this article is sourced from referenced websites. All Points North Group does not provide any express or implied claims, warranties, or guarantees regarding the accuracy, reliability, or currency of the material. It is essential to validate all information using the references provided below. All Points North Group does not make predictions about the future Canadian housing market. Buying a property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counsellor.


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