The funniest housing bubbles in Canada: March update on the housing bust

Year-on-year, home prices recorded the biggest decline as the seasonal increase in prices was much lower than a year ago.

By wolf richter For wolf street,

It’s the start of the spring sales season. So let’s see. Home sales in Canada rose 2.3% in January to February, but less than they should have, and on a year-over-year basis, sales fell 40% compared to a 37% decline in January I.

Single-family home prices rose 1.2% in February. But it was small compared to the 4.8% jump year-over-month.

According to the Canada Home Price Benchmark Index for single-family homes by the Canadian Real Estate Association (CREA), prices fell 18.5% year-over-year, the largest drop in the data. Since last March’s peak, the index has fallen 19.1%.

In Canadian dollar terms, the single-family home price index for Canada ticked up to C$8,900 in January to February, but it was smaller than the C$44,000 increase from a year ago, and so is the year-to-date benchmark. Price fell. up a record 18.5% to C$781,300, pushing the price back to July 2021.

Hangover after a free-money binge, This most absurd home price bubble was triggered globally and in Canada by the most ridiculous money-printing binge and interest rate suppression. But now consumer price inflation is breaking this strategy, as it always does. And the Bank of Canada has now raised its key policy rate by 425 basis points to 4.5%. And its quantitative test is in full swing. As a result, mortgage rates have increased across the board from year-ago levels.

Unlike the US housing market – the Canadian housing market didn’t even reset much during the financial crisis – and a spectacular housing bubble popped it out.

Greater Toronto Area: The MLS home price index for single-family homes rose 1.6%, or C$21,000, to C$1.294 million in February from March. But it was almost a quarter of the C$80,000 month-on-month jump from a year earlier. So year-to-date, the index is down 19.3%, or $306,800, both recording the largest year-to-date declines:

Greater Vancouver: The MLS home price benchmark value for single-family homes rose 0.7%, or C$12,000, to C$1.812 million in January to February. But the month-on-month jump pales in comparison to the jump to C$80,000 in February 2022. And so year-to-date, the index fell 12.0%:

  • From peak in April 2022: -13.7%
  • Year-to-date: -12.0%
  • Decline in 10 months from peak in April 2022: -C$288,000

Victoria: Single-family benchmark prices fell 0.4% for the month to $1.113 million, despite the spring selling season:

  • From peak in June 2022: -14.5%
  • Year-to-date: -5.7%
  • Decline in 8 months from peak in June 2022: -C$162,200

Hamilton-Burlington Metro: The single-family benchmark price rose 3.1% for the month to C$898,000. But the month-over-month jump was less than the 5.3% jump a year earlier, and so the year-over-year decline widened to 23%.

  • From peak in February 2022: -23%
  • Year-to-date: -23%
  • Decline in 12 months from peak in Feb 2022: -C$268,300.

Ottawa: The benchmark price of single-family homes rose 1.3%% to C$688,500 for the month. But in February last year, prices rose by 5.0%, and so the year-to-date decline was 15.0%:

  • From peak in March 2022: -16.7%
  • Year-to-date: -15.0%
  • Decline in 11 months from peak in March 2022: -C$137,700:

calgary: The single-family benchmark price jumped 1.7% for the month to C$584,700. But this was much less than the 6.6% month-on-month jump in February last year, and so the year-on-year growth dropped to just 2.2% (from 7.1% in January):

  • From peak in May 2022: -2.4%
  • Year-to-date: +2.2%
  • Downside in 9 months from May 2022 peak: -C$14,100.

Montreal: Single-family benchmark prices rose 1.1% to C$589,500 for the month:

  • From peak in May 2022: -9.9%
  • Year-to-date: -6.9%
  • Decline in 9 months from peak in May 2022: -C$65,000

Halifax-Dartmouth: Single-family benchmark prices fell 1.6% for the month, undoing most of January’s increase, to C$491,400:

  • From peak in May: -12.0%
  • Year-to-date: +3.1%
  • Decline in 9 months since peak in May: -C$67,100

Quebec City Area: The benchmark single-family price jumped 4.2% to C$361,500, almost completely erasing the decline in January:

  • From peak in May: -6.7%
  • Year-to-date: -1.8%
  • Decline in 8 months since peak in May: -C$26,000.

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