August 15, 2023 | The Most Splendid Housing Bubbles in Canada: After a Rocking & Rolling BoC-Pause Season, the First Price Drops Reappear

The spring selling season, or rather the Bank of Canada “Pause” season, which had been a rocking and rolling hoot, is over, and the first price declines are here. The Canada Home Price Benchmark Index for single family houses fell by 0.5% in July from June, and by 0.9% year-over-year, to $834,500 (all prices in Canadian dollars), the first decline since January, according to data from the Canadian Real Estate Association (CREA) today.

Note in the insert the rise in the prior month, June, of 0.8%: it had been the slowest rise in the entire upswing, with the others being two to three times as big, producing a classing rounding off pattern.

Since the peak in March 2022, the index has now dropped by 12.2%, or by $116,100. These kinds of free-money-spike-charts are just sort of funny.

The Bank of Canada announced in January that it would “pause” its rate hikes at 4.5% going forward to see how much more it needed to do, which was then followed by a four-month-long pause, the result of which was the conviction in the markets that the next moves would be cuts, the result of which was a drop in short-term interest rates, with the 1-year treasury yield dropping from 4.75% in January to 4.0% in mid-March, the result of which was the rocking and rolling BoC pause season in the housing market.

The Bank of Canada also noted this rocking and rolling BoC Pause season and in June unpaused by hiking 25 basis points, and in July hiked again by 25 basis points to 5%.

And we’re now seeing the first signs in the housing market of this new interest rate environment of higher for longer. Today, the 1-year yield reached 5.3%:

Greater Toronto Area: The MLS Home Price Index for single-family houses fell by 0.8% in July from June, the first decline since December, to $1.389 million.

• From peak in February 2022: -12.7% or -$202,100
• Year-over-year: -2.9%

Greater Vancouver: The MLS Home Price Benchmark Price for single-family houses rose by 1.1% in July from June, to $2.015 million:

• From peak in April 2022: -4.1% or -$87,200
• Year-over-year: +0.7%

Victoria: The single-family benchmark price rose by 0.5% for the month, to $1.178 million:

• From peak in April 2022: -9.0% or -$116,000
• Year-over-year: -3.8%

Hamilton-Burlington metro: The single-family benchmark price inched up 0.1% for the month, to $943,300. Note in the insert that the price has been essentially flat for the fourth month in a row:

• From peak in February 2022: -18.4% or -$213,600
• Year-over-year: +0.6%

Ottawa: The benchmark price of single-family houses dipped by 0.1% for the month to $737,700:

• From peak in March 2022: -10.5% or -$86,200
• Year-over-year: -3.1%.

Calgary: The single-family benchmark price rose 0.8% for the month, and by 6.2% year-over-year, to a new record of $629,800:

Montreal: The single-family benchmark price rose 0.6% for the month to $611,900:

• From peak in May 2022: -5.5% or -$35,700
• Year-over-year: -0.7%

Halifax-Dartmouth: The single-family benchmark price inched up by 0.2%, after having dropped by 0.5% in the prior month, to $543,500:

• From peak in April 2022: -6.2% or -$36,200
• Year-over-year: +6.9%.

Quebec City Area: The single-family benchmark price dropped 0.5% from the record in June, to $386,200, and was up by 5.3% year-over-year:

Wolf Richter August 15th, 2023

Posted In: Wolf Street

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