Canada’s average resale home price is back to where it was in the final months of 2015, the latest sign that the country’s long-running housing boom is history.
The Canadian Real Estate Association (CREA) reported Friday that the average price for all housing types sold through the Multiple Listing Service fell to $455,000 in January, down 5.5 per cent from the same month a year earlier. The last time the number came in below that level was December 2015.
What this means and doesn’t mean
This is a sign that the home resale market has weakened, and there is less money flowing through the market. But it doesn’t necessarily mean that the value of your home has fallen.
That’s because, as the Toronto and Vancouver markets slowed, the number of sales there fell sharply, meaning fewer of the expensive homes in those cities count towards the average price, while other less expensive markets count for more. That can drag down the average even if house prices don’t fall.
Greater Toronto and Greater Vancouver accounted for 29 per cent of all home sales in Canada in 2015. By 2018, that had dropped to 22 per cent.
For an idea of what’s happening with the value of your home, CREA’s house price index provides an “apples-to-apples” comparison of similar types of homes in the same markets. Nationwide, it shows a 0.8-per-cent increase over the past year. Growth in this measure in recent months has been at its weakest since the 2008-09 recession.
In Toronto, the “apples-to-apples” index is up 2.7 per cent in a year. It’s up 6.3 per cent in Montreal and 7.1 per cent in Ottawa. It’s down in Vancouver (-4.5 per cent), Edmonton (-2.9 per cent) and Calgary (-3.9 per cent).
Nationwide home sales came in lower than a year ago, once again, in January. CREA reported a 4-per-cent decline in sales compared to the same month a year earlier — and that’s comparing to what was already a weak month. January, 2018, was the first month of the new mortgage stress test.
“Notwithstanding the intended consequences, tighter mortgage regulations that took effect in 2018 combined with previous tightening will weigh on economic growth this year,” CREA chief economist Gregory Klump said in a statement.
Still, in seasonally adjusted terms, sales were up 3.6 per cent from December, prompting Royal Bank of Canada to call the latest data “a step in the right direction.” But the bank’s economists don’t see much of an upswing this year.
“We think Canadian home sales will remain subdued in 2019, rising less than 2 per cent from 2018’s five-year low. Prices are expected to edge only slightly higher,” RBC said in a report issued Friday.