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Canadian Housing Market Regains Momentum: Average Prices Up $100,000 Since January

After an icy 2022, the Canadian housing market is on the move again, recording a consistent four-month increase since the start of 2023.
After an icy 2022 due to aggressive rate hikes, the Canadian housing market is heating up again. The average resale home price in April reached $716,000, marking a consistent four-month increase since the start of 2023.

In the heart of a chilly Canadian winter, the real estate market began to thaw. After plunging due to interest rate hikes throughout 2022, the average price of a Canadian resale home has now increased for four consecutive months, according to new numbers released by the Canadian Real Estate Association (CREA) on Monday.

In April, the average selling price of a home that sold on CREA’s MLS system was $716,000. This marks the fourth monthly increase in a row, and a collective surge of more than $100,000 since the start of the year.

Four-Month Consecutive Rise in Average House Prices

Last year, the average house price peaked at just over $816,000 in February 2022 — right before the Bank of Canada began its aggressive campaign of rate hikes. Canada’s housing market then plunged into a deep freeze for much of the year, as drastically higher mortgage rates made it more expensive to finance the purchase of a home.

Average prices bottomed out a few months later, at just under $630,000 in July. The market then remained largely static until the start of 2023.

Interest Rate Hikes Slow Down, Real Estate Market Bounces Back

However, since the dawn of the new year, the market has seemingly resumed its upward momentum. This rebound is largely due to an uptick in sales in the Greater Toronto Area and B.C.’s Lower Mainland. These two regions saw both the biggest gains during the early days of COVID-19, and also the largest drawdown once rates rose.

When numbers from these two markets are removed, the national average price drops by more than $144,000, to an average house price of $572,000 in places that are not Toronto or Vancouver.

Canadian Real Estate Association Provides Data

Data presented by CREA provides a snapshot of the year-over-year change in average home prices across various cities and regions in Canada. From April 2022 to April 2023, most areas experienced a decrease in average home prices, with a few exceptions showing modest to significant growth.

Cities in Ontario such as Windsor-Essex, St. Catharines, and London and St. Thomas experienced the steepest declines in average home prices, with year-over-year changes of -16.5%, -14.2%, and -13.5% respectively. Other regions, including Hamilton-Burlington and Kitchener-Waterloo, also witnessed a double-digit decrease in prices. On the west coast, Fraser Valley, B.C., and Victoria, saw their average home prices fall by -10.7% and -10% respectively.

However, not all regions followed the downward trend. Cities like Saguenay and Saint John in Quebec and New Brunswick, respectively, saw an increase in average home prices. The most notable rise was in Sherbrooke, Quebec, with a year-over-year increase of 11%. Similarly, Calgary and Quebec City also witnessed an increase in average home prices by 2.6% and 3.4% respectively. These anomalies suggest that while the broader Canadian housing market experienced a downturn in the given period, certain regional markets were able to defy this trend and show growth.

Toronto and Vancouver Drive National Real Estate Rebound

Despite this rebound, it’s not all smooth sailing. The number of homes that sold during April increased by 11 per cent from March’s level, but it’s still almost 20 per cent below what it was during the feverish market of this time last year.

Furthermore, the Office of the Superintendent of Financial Institutions (OSFI) has flagged the housing market as a risk for Canada’s economy. With the memory of the 2022 crash still fresh in the minds of many, there’s a certain level of caution enveloping the market’s upward trend.

As we move forward into the rest of 2023, the question remains: Will the Canadian housing market continue to rise or will it once again feel the chill of a downturn? Only time will tell.


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