Canada’s red-hot real estate market showed signs of cooling down in March as both the number of homes sold and the average selling price declined from the previous month’s level.
The Canadian Real Estate Association (CREA), which represents more than 100,000 realtors across the country, reported Tuesday that on average, homes sold on the Multiple Listings Service went for $796,000.
That’s down about three per cent from the all-time high of $816,720 the previous month, and a noteworthy change in direction after the unprecedented tear that Canadian home prices have been on for the better part of two years now.
“While the market remains historically very active, March definitely saw a slowdown compared to February in terms of both activity and price growth,” CREA chair Jill Oudil said. “One month does not make a trend, so we’ll have to wait and see if this is the beginning of the long-awaited cooling off of this market.”
Average selling prices were down, as was the actual volume of homes sold. Total sales came in 5.4 per cent lower in March than they did in February. All told, some 54,957 homes were sold during the month. That’s a decline of 16 per cent from the all time record of nearly 67,000 that did in the same month a year earlier.
March is typically a strong month for home sales, but instead the month represented the biggest one-month decline in sales since June.
Though down from February’s level, the average selling price is still up by more than 11 per cent compared to where it was a year ago. But that pace of increase is slowing, too. March’s annual increase is about half the 20 per cent annual gain clocked in February.
A ‘marked slowdown’
CREA says the national average price number can be misleading because it is so easily skewed by sales in big expensive markets like Toronto and Vancouver. So the realtor group trumpets a different number, known as the House Price Index (HPI), as a better gauge of the market because it adjusts for the volume and type of housing.
The HPI increased by one per cent in March, a “marked slowdown” from the 3.5 per cent increase in February, CREA noted. As is the case with the national average, however, the HPI is still up an eye-popping 27 per cent on an annual basis.
Nasma Ali says she’s seen signs of a slowdown in Toronto, where she’s a broker and founder of One Group Real Estate. While the numbers released Tuesday are for March, she says the trend has become even more pronounced in April, where “buyer fatigue” may be setting in after the Bank of Canada hiked its interest rate twice in the last two months, and is expected to raise it even more in the coming months.
“I just think that this is kind of the beginning of a slower market, maybe a more balanced market,” she told CBC News in an interview. “We’re kind of at the top … we’ve just started to go down a little bit [but] I just don’t know how long or how low that that downward will be.”
WATCH | Market sentiment has changed, Toronto realtor says:
Toronto realtor says market has slowed
Nasma Ali says many owners who bought earlier this year are now feeling the pressure as they try to sell into a market that’s showing signs of cooling down.
Toronto home owner Syed Azhar Shah is one would-be seller who’s having to adjust their expectations down a little in the current market. Shah listed a home for sale in February, but recently took it off the market after being underwhelmed by what he was being offered.
“We had only about nine showings, and there was only one offer, which was much below what we wanted,” Shah told CBC News.
Shah says he may consider relisting the home in a year or so, but regardless he says he’s “quite disappointed” at the moment. “We are not going to get the prices … that we were getting in February,” Shah said.
Another formerly red hot large market, Vancouver, is also showing signs of cooling.
The average selling price in Greater Vancouver was $1.29 million in March, down slightly from $1.32 million the previous month. Prices are still up from $1.16 million a year ago, but realtor Leo Wilke with Engel & Völkers says the pace of increase is slowing. “The escalation that was happening during COVID was just so crazy,” he told CBC News in a recent interview. “One guy sells for X, the next guy gets more, the next guy gets more.”
“Now, what we’ve seen is we’ve kind of levelled off from that,” Wilk said.
Robert Kavcic, an economist with Bank of Montreal, says it’s too early to tell if March represents a blip or the start of a new downward trend, but he suspects the latter.
“Keep in mind that last March was the absolute summit of the pandemic demand mountain, so the reported year-over-year drop is somewhat exaggerated,” he said in a note to clients Tuesday. “There are signs that the appetite is pulling back amid higher mortgage rates, and the decline in March might be the first in a longer series of softening trends.”