Canada’s real estate correction continues as the narrative around infinite growth collapses. Canadian Real Estate Association (CREA) data shows the benchmark price of a home fell again in December 2022. The price decline marked the ninth consecutive monthly drop, sparked by rising rates. Home prices have now dropped the most since 2009, and the near-term risk is towards the downside.
Canadian Real Estate Prices Fell Another $9k Last Month
Canadian real estate prices are dropping, despite sales beginning to find a floor. A typical, or benchmark, home’s price fell to $717,000 in December, down 1.2% (-$9,000) for the month. Compared to last year, prices are 7.5% (-$58,100) lower. Add the cost of mortgage interest, and it’s not the outcome buyers were expecting this time last year.
Canadian Real Estate Prices
The price of a typical home across Canada, in Canadian dollars.
Source: CREA; Better Dwelling.
Canada’s Home Prices Have Dropped The Most Since 2009
Despite what sounds like a small annual contraction, it’s on track to be one of the largest in history. The 7.5% annual decline is now larger than the 2019 correction, and is approaching the size of the 12.5% drop in 2009. CREA’s benchmark price strangely only goes back to 2005, but this is the second largest annual drop in the index.
Canadian Real Estate Price Growth
The 12-month change in Canada’s benchmark home price.
Source: CREA; Better Dwelling.
Canadian Home Prices Have Dropped $151k From Peak
Does the annual price drop sound tame in contrast to the numbers you’ve been hearing? That’s because the price peak was less than a year ago, so the 12-month doesn’t measure the full drop. The record high was in March 2022, and the benchmark has fallen 17.4% (-$151,300) since then. By looking at just the 12-month change, it’s easy to forget thousands of people bought at higher prices.
Canada’s home price correction continues as budgets adjust to higher interest rates. A slight tightening of inventory is observed every December through February. It’s a less than ideal time to sell, so many wait until the Spring if they can—though that’s not always the case with buyers. In March, we’ll have a better idea if inventory is firming, or sellers miscalculated and waited to list at the same time.
