March 18, 2024 | The Most Splendid Housing Bubbles in Canada: National House Prices Flat in Feb., -16% from Peak, Condos Drop Further, on Bank of Canada’s 5% & Massive QT

House prices in Canada were unchanged in February compared to January, seasonally adjusted, having fallen by 15.6% from the peak in February 2022, according to the Home Price Benchmark Index for single family houses by the Canadian Real Estate Association (CREA) today. Compared to a year ago, it ticked up 1.6%.

In dollar terms, the Benchmark Index for single-family houses has fallen by $145,500 from the peak in February 2022, to $788,800, just above where it had first been in August 2021 (all amounts in Canadian dollars). But there was a wide divergence between the major markets, and between houses and condos in some markets. And we’ll get to them.

Home sales dipped 3.1% in February from January, seasonally adjusted. Compared to the collapsed levels in February a year ago, they rose by 19.7%, but were still 5% lower than the 10-year average for February.

New listings ticked up 1.6% in February from January, even as sales fell 3.1%. And supply ticked up to 3.8 months of sales.

The Bank of Canada has tightened policy to deal with inflation. In July 2023, it hiked its overnight rate to 5.0% and has been in no rush to cut. For part of last year, it looked like inflation had been sort of vanquished, and rate-cut bets became all the rage. But late last year, inflation served up some nasty surprises – driven by housing costs, including a massive spike in the rent CPI.

The five-year government bond yield, which is crucial for Canadian mortgages, and which had dropped to 3.17% by the end of December, has since then risen to 3.67%.

Under its QT program, the BoC has so far shed 46% of its securities at the peak. This amounts to having shed 59% of the securities it had added during its pandemic QE.

Home Prices by Market.

Greater Toronto Area, single-family houses: The MLS Home Price Benchmark Index for single-family houses rose 1.1% in February from January, to $1,302,000 seasonally adjusted.

Compared to the peak in February 2022, the index is down by 16.4%, or by $255,000, and is just above where it had first been in September 2021. Compared to February 2023, the index is up 2.1%.

Greater Toronto Area, Condos: Prices fell 0.8% in February from January, to $681,700, down by 0.8% from February 2023, and down by 12.7% from the peak in February 2022, and the lowest since October 2021:

Hamilton-Burlington metro (part of the “Greater Toronto and Hamilton Area”): The single-family benchmark price rose by 0.9% in February from January, to $882,700 seasonally adjusted.

• From peak in February 2022: -21.9% or -$247,600
• Year-over-year: +0.9%

Hamilton-Burlington metro condos:

• Month-to-month: -2.1%
• From peak in April 2022: -15.8%
• Year-over-year: +0.7%

Greater Vancouver single-family: The benchmark price for single-family houses dipped 0.1% for the month, to $1,986,700 seasonally adjusted:

• From peak in April 2022: -4.2% or -$76,900
• Year-over-year: +7.5%

Greater Vancouver condos:

• Month-to-month: +1.2%%
• Year-over-year: +5.8%

Victoria: The single-family benchmark price fell by 1.1% for the month to $1,125,100 seasonally adjusted:

• From peak in April 2022: -11.2% or -$142,200
• Year-over-year: +0.7%

Ottawa: The benchmark price of single-family houses fell by 1.2% for the month, to $708,800, below where they’d first been in March 2021:

• From peak in March 2022: -11.5% or -$91,900
• Year-over-year: +3.7%.

Calgary: The single-family benchmark price rose by 0.7% for the month to a new high of $658,900 and was up 12.2% year-over-year:

Montreal: The single-family benchmark price edged up 0.2% for the month to $604,700 seasonally adjusted.

• From peak in May 2022: -5.0% or -$31,900
• Year-over-year: +3.4%.

Halifax-Dartmouth: The single-family benchmark price rose 0.5%, to $538,200; in essence unchanged for the past four months.

• From peak in April 2022: -4.2% or -$19,200
• Year-over-year: +5.3%.

Quebec City Area: The single-family benchmark price jumped 2.9% for the month, to $395,000, after having dropped by 3.9% in the prior month. It was up by 6.9% year-over-year:

Wolf Richter March 18th, 2024

Posted In: Wolf Street

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