Fall may look a lot like August for many of Canada’s housing markets: RBC Economics

Houses for sale in Ottawa

As summer turns to fall and sweater weather sets in, the housing market has already entered a cooling phase, mirroring the trends seen in August. In his latest report, Robert Hogue, assistant chief economist with RBC Economics, notes that the Bank of Canada’s interest rate hikes this summer have significantly tempered what was initially a robust spring market.

Rebalancing across major cities


August market reports from various local real estate boards indicate a notable rebalancing of supply and demand conditions in several key cities. Vancouver, the Fraser Valley, Toronto, and Hamilton are among the areas where this rebalancing is most evident, while Calgary’s market remains “exceptionally firm.”

“Consistent with rebalancing trends, there’s growing evidence this spring’s price rally is running out of steam in Ontario and B.C.,” Hogue explains. Local real estate boards reported small month-to-month declines in the MLS Home Price Index (HPI) in Vancouver, the Fraser Valley, and Toronto. However, Calgary’s property values continue to appreciate, driven by migration and a thriving provincial economy.

Despite an uptick in inventory, buyers are expected to remain cautious in many parts of Canada this fall. High-interest rates, ongoing affordability concerns, and the looming threat of a recession are poised to be significant obstacles to a material recovery. Hogue suggests that any substantial acceleration in the market’s recovery will likely have to wait until interest rates come down in 2024.


Toronto area


The Greater Toronto Area experienced a slowdown in August, with home resales slipping another 1.0 per cent month-over-month on a seasonally-adjusted basis. 

Hogue explains, “What’s restraining the market has less and less to do with a lack of purchasing options. New listings and inventories have been rising noticeably fast over the past five months—including in August. Rather, it increasingly reflects sagging buyers’ sentiment in the face of high-interest rates, extremely poor affordability and a softening economy.”

Demand-supply conditions have rebalanced, with the sales-to-new listings ratio approaching buyers’ market territory. Prices edged lower for the first time since February, signalling a stagnant market in the near term.


Montreal area


In the Montreal area, a growing supply of homes for sale has boosted transaction flows, with new listings increasing for the fourth time in five months. Demand-supply conditions remain somewhat tight despite more sellers entering the market, providing modest but uneven support for property values. 

“In August, the median price for a single-detached home gained 1.1 per cent from July, whereas it edged lower by 0.5 per cent for a condo apartment. Properties situated on the Island of Montreal generally recorded larger appreciation relative to Laval, and the North and South Shores.” Hogue expects further measured appreciation in the near term.

Vancouver area


Vancouver’s spring rally has lost momentum, with buyers pulling back in August. The Bank of Canada’s rate hikes unsettled prospective buyers despite an increase in homes for sale. 

“Successive increases in the number of homes put up for sale since April—which reached a 15-month high in August—should have fired them up instead by offering opportunities to unlock pent-up demand that built during the year-long market correction. The net result is a more balanced market. And with this spring’s tightness gone, prices are losing support.”

Vancouver’s aggregate MLS HPI slipped slightly between July and August for the first time since March. Hogue predicts the more “cautious tone” will keep prices on a flat trajectory in the coming months.



Calgary continues to be a standout market, with August home resales estimated to have risen by 10 per cent month-over-month on a seasonally adjusted basis. Growing supply has not significantly eased market tightness, as inventories remain exceptionally low. Strong demand and explosive population growth will keep the market highly competative for buyers. Calgary’s aggregate MLS HPI is up 7.9 per cent from a year ago, the most significant advance among major Canadian markets. Hogue says there are no immediate signs of a cooling trend in the short term.

Read Hogue’s full report here.

Source link
Ottawa New Listings

Leave a Reply

Your email address will not be published. Required fields are marked *