Due to higher interest rates, Canadian home prices have fallen 6% to $746,000 in April. Home sales also reduced by 12% nationally in April. According to the Canadian Real Estate Association, the biggest drops were seen in cities like Toronto.
In February
2022, the prices peaked at a record high of over $816,000. The average home
prices have now declined for two months in a row. In March, the average price
stood at $796,000. April is usually an important month for the real estate
market.
CREA chair Jill Oudil said, "Following a
record-breaking couple of years, housing markets in many parts of Canada have
cooled off pretty sharply over the last two months, in line with a jump in
interest rates and buyer fatigue."
CREA also stated
the average selling price could be misleading as it's easily skewed by
expensive and numerous sales in big cities Vancouver and Toronto. CREA
highlighted House Price Index (HPI) as a better gauge of the market as it
adjusts for the volume and type of homes sold. Interestingly, the HPI reduced
by 0.6% in April. It was the first monthly decline in two years.
Though the home
prices are lower than the recent peak, they are still approximately 7% higher
than what they were a year ago.
Bad News for
Sellers and Recent Buyers
Though the lower
prices might be good news for potential buyers, they are bad for sellers,
especially those who have already bought somewhere else.
Buyers who recently
bought properties at the highs assuming their lenders would loan them a certain
amount, are now upset as the banks value property less than expected during the
appraisals process. So, such buyers will need to develop more than they expected
upfront.
Ontario
Housing Reached New Highs
Ontarian real
estate markets have seen a record-breaking first quarter in 2022 as housing
prices reached new heights and sellers remained well-positioned. As of March
2022, the average price of an Ontario home was $1,052,920, while it was
$1,269,900 in the Greater Toronto Area.
The prices of
detached homes in the four Golden Horseshoe communities, Cambridge, Barrie, Kitchener-Waterloo, and
Oshawa, surpassed $1 million for the first time.
TRREB's
Opinion
The Toronto Regional Real Estate Board (TRREB) will
be releasing its figures on housing prices next week. It said when the Bank of
Canada raised interest rates last month and signaled more hikes are likely
later this year, it had a cooling effect on home prices. It also said that housing
prices are still up by double digits over the year before. Though there may be
decreases from month to month, immigration, high employment, and a lack of
housing supply mean GTA housing prices will likely remain strong over the
longer term, TRREB believes.
Some areas are
seeing smaller price drops as compared to others. For instance, as more people
go back to the office in downtown Toronto, prices in the city's core will likely
hold their value, even if the home prices fall further in the next few months.
Sources:
https://www.cbc.ca/news/business/housing-prices-april-1.6454728
https://toronto.ctvnews.ca/what-1-million-gets-you-in-real-estate-markets-across-ontario-1.5904144
https://toronto.ctvnews.ca/housing-prices-drop-up-to-22-per-cent-in-the-toronto-area-1.5879275