Canada’s housing market is currently experiencing significant fluctuations, notably characterized by declining home sales and shifting affordability across various cities. According to recent data from regional real estate boards, markets in cities such as Hamilton, Toronto, Vancouver, and others are grappling with challenges reminiscent of the financial landscape from over a decade ago. This new context raises pertinent questions about buyer behavior, economic conditions, and the long-term implications for the Canadian housing market.
In Hamilton, the Realtors Association of Hamilton-Burlington (RAHB) reported a concerning trend in home sales, with figures for April showing a staggering 26% decline year-over-year. The stark decrease in sales has resulted in a months-of-supply metric reaching levels not seen since 2009, indicating a shift toward a buyers’ market. The average home price in Hamilton has also experienced a steep decline, decreasing by $9,600 from March to April, settling at $801,400. This downward pressure on home prices has correspondingly lowered the required annual income needed to qualify for a mortgage by approximately $1,800, while monthly mortgage payments decreased by $49 to $4,066.
Turning to Ontario’s largest city, Toronto, potential home buyers remain hesitant, largely attributed to ongoing economic uncertainties and persistently high property prices. The Toronto Regional Real Estate Board (TRREB) reported a year-over-year sales decline of 23.3% for April, with new inventory increasing by 8.1%. This trend exerted downward pressure on home prices, resulting in a 4.1% dip, bringing the average price to $1,009,400, a $7,500 decrease from March. Consequently, prospective buyers now find that the required annual income to purchase a home has fallen by $1,400, while monthly mortgage payments decreased by $38 to $5,122.
Vancouver, too, is witnessing a contraction in home sales, with the Greater Vancouver Realtors (GVR) reporting a 23.6% drop in transactions compared to the previous year. The number of active listings surpassed 16,000 for the first time since 2014, indicating a growing inventory amidst buyer caution fueled by high prices and broader economic uncertainties. Despite a slight decline of 3.4% in new listings, the resulting average home price dropped by $6,300 month-over-month, settling at $1,184,600. This change means that buyers now need to earn approximately $1,190 less annually to qualify for a mortgage, while average monthly mortgage payments decreased by $32 to $6,011.
Analyzing broader trends across Canada reveals a mixed picture of affordability. April data indicated that in six out of 13 cities, affordability worsened. Notably, several markets with traditionally lower prices experienced significant swings, resulting in an increase in prices, while more expensive locales, such as Victoria, continued to see diminished affordability.
In Regina, home sales saw a year-over-year decline of 13%, with 365 transactions recorded. However, the Saskatchewan Realtors Association (SRA) highlighted that this figure remains 26% above the 10-year average. Although new listings decreased by 4% year-over-year, home prices increased, with the average price rising by $9,100 to $335,400. This upward trend has subsequently increased the required annual income to qualify for a mortgage by $1,730, with average monthly payments climbing to $1,702.
Contrastingly, Montreal appears to be enjoying robust demand, with real estate transactions reflecting levels comparable to those prior to the pandemic. The Quebec Professional Association of Real Estate Brokers (QPAREB) reported a 10% increase in April sales compared to the previous year. This heightened demand has resulted in rising home prices; the average increased by $6,300 month-over-month to reach $574,900. Consequently, the required annual income for prospective buyers has increased by $1,190, with monthly mortgage payments rising by $32 to $2,917.
Meanwhile, in Victoria, home sales exhibited modest gains with a 4.7% rise from March, despite being 4.7% down from the previous year. According to the Victoria Real Estate Board (VREB), the increase in new inventory, up 13%, has contributed to a balanced market for buyers. Nonetheless, the average home price in the city has climbed by $6,300 to $897,300, necessitating an additional $1,190 in annual income compared to the previous month, with average monthly payments jumping by $32 to $4,553.
Amid these varying market conditions, the affordability report from Ratehub.ca sheds light on how fluctuating home prices and mortgage rates impact prospective buyers. This report evaluates the average required annual income needed to qualify for a mortgage in major cities, incorporating factors such as the mortgage stress test rate, creating a comprehensive understanding of how affordability is shifting across the nation.
As the housing market adjusts to these trends, the implications for future home buyers, investors, and policymakers remain complex. The interplay between economic uncertainty, rising interest rates, and fluctuating prices will likely shape the landscape for the foreseeable future. Stakeholders will be keenly observing how these dynamics unfold, particularly in terms of affordability and the broader economic environment.
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