July 14, 2024

KMCKrell

Taste the Home & Environment

Spring housing market stalls as homebuyers remain on the sidelines

Spring housing market stalls as homebuyers remain on the sidelines

Canada’s typically busy spring housing market stalled as homebuyers largely chose to wait on the sidelines for confirmation of the Bank of Canada’s first rate cut.

On an annual basis, May home sales were down by double digits in Toronto (+12.7%) and Vancouver (-19.9%), and unseasonably slower in Ottawa (-9.2%) and Montreal (+4%), according to early data from the country’s largest real estate boards.

“Buyers remained in a wait-and-see mode in May with an interest cut looming around the corner,” RBC economist Robert Hogue wrote in reference to last week’s Bank of Canada interest rate cut.

Calgary remained the exception with sales up 7.3% from a year earlier.

The slowdown in sales has led to a build in inventories, which has started to weigh on recent gains in average home prices.

“The recent (mild) upturn in home prices is losing steam,” Hogue noted. “Any further easing will largely depend on buyers’ reaction to the Bank of Canada’s launch of a rate-cutting exercise in June. Our view is it will take several cuts to pull a critical mass of buyers from the sidelines.”

He added that prices are likely to remain flat until that happens before resuming a gradual thereafter. “But with so much pent-up demand out there, it’s possible buyers jump back more quickly, which would set prices on a stronger trajectory,” he added.

Regional housing market roundup

Here’s a look at the April statistics from some of the country’s largest regional real estate boards:

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Greater Toronto Area

Toronto home sales
May 2024 YoY % Change
Sales 7,013 -12.7%
Benchmark price (all housing types) $1,165,691 -2.5%
New listings 18,612 +21.1%
Active listings 21,760 +83.3%
Source: Toronto Regional Real Estate Board (TRREB)

“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year. We have seen selling prices adjust to mitigate the impact of higher mortgage rates,” said TRREB Chief Market Analyst Jason Mercer.

“Affordability is expected to improve further as borrowing costs trend lower,” he added. “However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases.”


Greater Vancouver Area

Vancouver home sales
May 2024 YoY % Change
Sales 2,722 -19.9%
Benchmark price (all housing types) $1,212,000 +2.3%
New listings 6,384 +12.6%
Active listings 13,600 +46.3%
Source: Greater Vancouver Realtors (GVR)

“The surprise in the May data is that sales have come in softer than what we’d typically expect to see at this point in the year, while the number of newly listed homes for sale is carrying some of the momentum seen in the April data,” said Andrew Lis, Director of Economics and Data Analytics at Greater Vancouver Realtors, formerly the Real Estate Board of Greater Vancouver.

“It’s a natural inclination to chalk these trends up to one factor or another, but what we’re seeing is a culmination of factors influencing buyer and seller decisions in the market right now,” he added. “It’s everything from higher borrowing costs, to worries about the economy, to policy interventions imposed by various levels of government.”


Montreal Census Metropolitan Area

Montreal home sales
May 2024 YoY % Change
Sales 4,863 +4%
Median Price (single-family detached) $575,500 +5%
Median Price (condo) $410,000 +2%
New listings 7,005 +16%
Active listings 18,996 +22%
Source: Quebec Professional Association of Real Estate Brokers (QPAREB)

“Although sales for the month of May rose only by 4% compared to May 2023, we should keep in mind that it is in comparison to the strong market at this time last year. Activity therefore remained particularly solid,” said Charles Brant, QPAREB Market Analysis Director.

Calgary

Calgary housing statistics
May 2024 YoY % Change
Sales 2,881 +7.3%
Benchmark price (all housing types) $585,000 +10.3%
New listings 3,491 +11.5%
Active listings 2,711 -16.2%
Source: Calgary Real Estate Board (CREB)

“While supply levels are still declining, much of the decline has been driven by lower-priced homes,” said CREB Chief Economist Ann-Marie Lurie. “Persistently high-interest rates are driving demand toward more affordable products in the market and, at the same time, driving listing growth for higher-priced properties.”


Ottawa

Ottawa home sales
May 2024 YoY % Change
Sales 1,545 -9.2%
Benchmark price (all housing types) $651,300 +1.2%
New listings 3,034 +26.2%
Active listings 3,552 +59.4%
Source: Ottawa Real Estate Board (OREB)

“Ottawa’s early spring market was unsurprisingly steady,” said OREB President Curtis Fillier. “The increase in new listings indicates that sellers are more confident that properties are moving as more activity returns to the market.”