Brightest housing bubbles in Canada: The spring selling season in a housing bust

Prices rose in March but are down 17.5% year-on-year, the second worst hit in the data. Sales -34% year-over-year.

By wolf richter For wolf street,

The spring sales season is now in full swing in Canada. So let’s see. Sales of all home types increased by 1.4% in February to March, after a 1.4% increase in January to February, so on a year-on-year basis sales declined by only 34% from a year ago, Which is the smallest drop. september.

And the Canada Home Price Benchmark Index for single-family homes rose 2.0% in February to March, as it should during the spring selling season. For example, in March 2017, it jumped 3.7%; And in March 2016, it increased by 2.6%. According to data from the Canadian Real Estate Association (CREA), when it grew less in March, it increased sharply in March.

And so, compared to March last year, which was the peak, prices were down 17.5%, the second worst drop in history for the 2005 data, second only to the February drop.

In dollar terms, the single-family home price index for Canada rose $15,400 in February to $796,700 in March from where it was in November. But it was still down year-to-date at $169,500 (all prices in Canadian dollars). Canada’s housing market did not reset during the financial crisis – unlike the US housing market – and continued to simply balloon after a small decline.

Such charts are peculiar in a way. If money is free, then prices don’t matter. And if the money isn’t free anymore, that’s okay.

The Bank of Canada’s free-money binge is over, This spectacular housing bubble took on mega-proportions in early 2020 when the BoC launched its massive money-printing program – the infamous “quantitative easing” or QE – and pushed its policy rates down to near 0% .

It all ended a year ago. The BoC raised its overnight rate by 425 basis points to 4.50%, and indicated there would be no rate cut this year. Mortgage rates have increased across the board. And Qt — as opposed to “quantitative tightening,” Qi — is making fine progress. Since peak-balance-sheet, total assets have now fallen 34% to $382 billion:

Greater Toronto Area: The MLS home price index for single-family homes rose 2.8% from February to March, to $1.33 million. Therefore:

  • From peak in February 2022: -17.0% or -$273,000
  • Year-to-date: -16.9%

Greater Vancouver: The MLS home price benchmark value for single-family homes jumped 2.7%, or $48,400, to $1.86 million in February from March. Therefore:

  • From peak in April 2022: -11.1% or -$239,600
  • Year-to-date: -11.2%

Victoria: Single-family benchmark prices fell 0.5% for the month to $1.11 million, despite the spring selling season. Therefore:

  • From peak in June 2022: -14.8% or -$126,700
  • Year-to-date: -10.3%

Hamilton-Burlington Metro: Single-family benchmark prices rose 0.4% for the month to $900,900. Therefore:

  • From peak in February 2022: -22.7% or -$265,100
  • Year-to-date: -21.8%

Ottawa: The benchmark price of single-family homes rose 2.1% for the month to $702,800. Therefore:

  • From peak in March 2022: -14.9% or -$137,700
  • Year-to-date: -14.9%.

calgary: The single-family benchmark price jumped 2.1% for the month to $597,200. Therefore:

  • From peak in May 2022: -0.3% or -$1,600
  • Year-to-date: +1.5%.

Montreal: Single-family benchmark price jumped 1.7% for the month to $599,300:

  • From peak in May 2022: -8.4% or -$55,200
  • Year-to-date: -6.9%

Halifax-Dartmouth: Single-family benchmark prices rose 2.6% for the month, undoing most of the dip in February, after a jump in January. A little noisy, eh? up to $504,300. Therefore:

  • From peak in May 2022: -9.7% or -$54,200
  • Year-to-date: -5.6%.

Quebec City Area: The single-family benchmark price jumped 4.6% in March to $378,200 after a 4.2% jump in February. Therefore:

  • From peak in May 2022: -2.4% or -$9,300.
  • Year-to-date: -0.4%.

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