The Canadian Real Estate Association this morning revealed that an absolute disaster is underway within the Canadian real estate market. The agency this morning released data for the month of September, which showed that activity on a year over year basis has declined 32.2% for the month of September.
Home sales declined on a month over month basis as well, dropping 3.9% relative to that of August’s results. Home prices however are seemingly not yet reacting to the declining activity, with the MLS Home Price Index said to have declined by just 1.4% on a month over month basis, while still remaining up 3.3% on a year over year basis.
Actual home prices, on a non-seasonally adjusted basis, are said to have declined 6.6% year over year however. The average price across the country currently sits at $640,479 for a home, however, excluding the Toronto and Vancouver regions from that figure drops the national average price by $117,000 to roughly $523,000.
“September was another month of lower sales activity, although, with many sellers also opting to play the waiting game, the market remains on the tighter side of balanced market territory. It makes for an interesting dynamic, one that doesn’t really have many historical precedents. The market has changed so much in the last year, and the adjustment to higher borrowing costs is still underway,” said Chair of the CREA Jill Oudil.
The activity decline is being blamed on the recent rate hike by the Bank of Canada in September, which pushed qualifying rates for variable rate mortgages higher.
“The important thing to remember is we’re still in the middle of a period of rapid adjustment, with buyers and sellers trying to feel each other out while a lot of people have had to take their home search plans back to the drawing board. As such, resale markets may remain on the quiet side for some time yet, with the flipside of that coin being even more pressure on rental markets,” continued Oudil.
Newly listed homes meanwhile declined 0.8% versus August, versus the drop of 4.9% seen in August and 6.1% in July. 3.7 months of inventory is said to currently be available across the country, versus 1.7 months seen in the early parts of the year. The long term average sits at about 5.0 months.
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