Canadian Real Estate Prices Are Moving Sideways & That’s Not Good News

Canadian Real Estate Prices Are Moving Sideways & That’s Not Good News

Canadian real estate prices are starting to perk up after a mild correction, but still have a ways to go. Canadian Real Estate Association (CREA) data shows the price of a composite benchmark, or typical, home climbed in April. However, the mild increase wasn’t as notable as the continued sideways trend of home prices. Buyers and sellers have been narrowing their trading range, as both sides eagerly wait to see if rate cuts can re-ignite this market, or if it makes another leg lower. 

Canadian Real Estate Prices Fail To Meet Seasonal Growth

Canadian home prices printed another small advance showing some signs of firming. A typical, or benchmark, home saw prices climb 0.8% (+$6,200) to $735,900 in April. However, prices remain 0.9% (-$6,700) lower than last year. Not significantly lower than last year, but the longer-term trend isn’t encouraging.

Lower Seasonal Highs For Canadian Home Prices?

The price of a typical home across Canada, in thousands of Canadian dollars.

Source: CREA; Better Dwelling.

Canadian Real Estate Prices Are Heading For Lower Highs

It’s not clear if the trend is a friend… of sellers, at least. Home prices have now climbed for 3 consecutive months, but still fell short compared to previous months. Failing to meet last year’s growth helped to push the annual rate back down into negative territory. 

While prices are flat from a year ago, it’s worth noting that peak seasonal growth doesn’t look like it will beat last year. Generally speaking, lower and lower seasonal highs aren’t a great sign for asset values, and may indicate downward pressure. Annual growth was last this low a little less than a year ago (July 2023). 

Canadian Real Estate Price Growth

The 12-month change in the benchmark price of a typical home across Canada. 

Source: CREA; Better Dwelling.  

Canadian Home Prices Are Still 14% Below Peak 

Other than the notable horizontal trading range, the biggest standout in the chart is the peak. Despite only making a modest move from last month, the benchmark price is 14.0% (-$119,900) from the record high hit in March 2022. Even at the modest advance seen in April, it would take quite some time to re-take that all-time high.  

Canadian real estate prices are essentially not doing much these days. While monthly growth is a positive development for bulls, it was nowhere near seasonal expectations. Looking at the benchmark over time, the sideways trade makes it clear that homebuyers aren’t sure what to expect. On one hand, a few markets have seen price advances on low sales volumes, with the expectation that rate cuts will light a fire under prices. At the same time, it’s becoming more difficult to see prices continually outpace incomes at such a rapid pace.