{"id":11452,"date":"2019-01-21T11:11:00","date_gmt":"2019-01-21T19:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11452"},"modified":"2019-01-15T13:32:52","modified_gmt":"2019-01-15T21:32:52","slug":"canadian-home-prices-post-biggest-decline-since-1995-so-whats-next","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/01\/canadian-home-prices-post-biggest-decline-since-1995-so-whats-next\/","title":{"rendered":"Canadian Home Prices Post Biggest Decline Since 1995. So What’s Next?"},"content":{"rendered":"

It may have been tough to imagine even just 12 months ago, but Canada\u2019s housing market is stagnating \u2014 and don\u2019t expect a return to previous highs any time soon.<\/p>\n

So suggests BMO Chief Economist Douglas Porter in a response to the newest statistics from the Canadian Real Estate Association (CREA), published today.<\/p>\n

\u201cIt\u2019s probably not a stretch to think that the Canadian housing market has entered into a prolonged period of relative stagnation, where sales are roughly flat and prices no longer outrun inflation,\u201d writes Porter.<\/p>\n

Porter notes that sales activity declined 11.1 percent in 2018, while the average price of a home dropped 4.1 percent, representing the largest downturn since 1995. It\u2019s also the first time prices have fallen since 2008, when the market was roiled by the Great Recession.<\/p>\n

According to CREA, the average price of a Canadian home was $472,000 in December, off by 4.9 percent from the same time a year ago.<\/p>\n

\u201cWhat a difference a year makes,\u201d says Barb Sakkau, CREA\u2019s president, in a statement.
\n\"\"<\/a>
\nBoth Sakkau and BMO\u2019s Porter note that December 2017 home sales were higher than usual as some homebuyers rushed to purchase property before new mortgage stress test rules were implemented.<\/p>\n

\u201cSince then, the stress-test has weighed on sales to varying degrees in all Canadian housing markets and it will continue to do so this year,\u201d Sakkau predicts.<\/p>\n

However, Porter suggests that fundamentals, including a stronger labour market, will lift home prices in Canada\u2019s biggest market despite stress testing. \u201cRealistically, prices should keep pace with inflation (or a bit better) as the cycle runs its course,\u201d he writes.<\/p>\n

That was certainly the case in December. The benchmark price of a Greater Toronto home was $764,200, an increase of about 3 percent on a year-over-year basis.<\/p>\n

As with Toronto, Porter anticipates \u201cstability\u201d in Vancouver as a result of fundamentals. While Vancouver\u2019s benchmark home price remains above the $1-million mark, it has declined about 2.7 percent from a year ago.<\/p>\n

\u201cClearly this market has had even more to swallow (provincial measures in addition to federal moves) than most, and some of those headwinds should ease this year,\u201d says Porter.<\/p>\n

Not only did BC expand the Metro Vancouver foreign-buyer tax to the area\u2019s environs, it increased it to 20 percent, up from 15 percent.<\/p>\n

The province also announced a speculation tax, which follows the introduction of the City of Vancouver\u2019s empty-home tax, which was implemented in 2016 and has raised tens of millions of dollars for the municipality.<\/p>\n

While homebuyers in the Prairies don\u2019t face the same hurdles, the region\u2019s biggest housing markets have been struggling as the energy sector, a major employer, has been hit with lower oil prices.<\/p>\n

\u201cThe Prairies\u2014we\u2019ll lump Calgary, Edmonton and Regina into this group\u2014are in full-fledged stagnation mode already, to varying degrees,\u201d Porter comments.<\/p>\n

Benchmark prices were down annually in all three markets as of December.<\/p>\n

\u201cIn fact, these boom-bust markets are undergoing more of a slow and agonizing melt at the moment, and there\u2019s little reason to believe conditions will dramatically change this year,\u201d Porter adds.<\/p>\n

Canadian Home Prices Post Biggest Decline Since 1995. So What’s Next?<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"

It may have been tough to imagine even just 12 months ago, but Canada\u2019s housing market is stagnating \u2014 and don\u2019t expect a return to previous highs any time soon. … [read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11452","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"\nCanadian Home Prices Post Biggest Decline Since 1995. 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