Canadian real estate prices continue to grind lower as buyers sit on the sidelines. Canadian Real Estate Association (CREA) data shows the composite benchmark price fell in July. The price of a typical home fell for a fourth consecutive month, wiping out more than half the annual gain. Those massive surges in price we started 2022 with? They’re now completely gone.
Canadian Real Estate Prices Fell $27k Last Month
Canadian real estate prices remain elevated but they’re coming down fast. A typical home (composite benchmark) fell to $782,300 in July, down 3.4% (-$27,400) from the previous month. Prices remain 10.9% (+$76,700) higher than the same month last year, but at this rate those gains can be vaporized quickly. It was the fourth consecutive month home prices fell, and it’s expected to continue.
Canadian Residential Real Estate Benchmark Price
The composite benchmark price of a home across Canada, in dollars.
Source: CREA; Better Dwelling.
Canadian Real Estate Prices Decelerate To 2020-Growth Levels
After peaking in February 2022, annual growth has been decelerating at a rapid rate. The benchmark is still showing double-digit growth, but it’s the slowest since October 2020. That highlights how bonkers the market has been — record sized monthly price drops have barely put a dent in record gains.
Canadian Residential Real Estate Benchmark Price Growth
The 12-month rate of growth for the Canadian composite benchmark prices.
Source: CREA; Better Dwelling.
The price of a typical home in Canada is now back to the lowest level since December 2021, which wasn’t that long ago. However, it probably feels like forever ago for buyers in February or March, at the peak.
Canadian Home Prices Are 10% Lower Than Peak
Remember the massive monthly gains we were writing about at the start of the year? Those are now gone. A typical home peaked in March 2022, and prices have now dropped 9.9% (-$86,000) from that point. It’s just 0.1 points from being considered a correction at this point, but probably close enough to call it by the time the data was released.
For those not feeling the CREA HPI, the average price is now in a decline. The average sale price of a home fell to $623,000 in July, down 5.0% from last year. It’s worth noting the average isn’t adjusted for qualitative factors or change in mix like the HPI. That means it isn’t necessarily showing price drops, but might be showing a change in the mix of homes sold. The takeaway is still that fewer expensive homes are being sold, regardless of whether it’s price drops or a lack of demand.
Canada’s real estate market fell once again, and is expected to continue doing so. Higher rates aren’t just throttling capital, but more importantly broke the speculative mindset. A surge in Canadian real estate deals falling apart, and prices not continuing to accelerate in growth has a lot of prospective buyers hitting pause.
