{"id":20393,"date":"2022-08-09T10:10:00","date_gmt":"2022-08-09T17:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=20393"},"modified":"2022-08-08T12:45:52","modified_gmt":"2022-08-08T19:45:52","slug":"the-housing-correction-now-runs-far-wide-across-canada","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/08\/the-housing-correction-now-runs-far-wide-across-canada\/","title":{"rendered":"The Housing Correction Now Runs Far &#038; Wide Across Canada"},"content":{"rendered":"<p style=\"text-align: justify;\">Canada\u2019s largest bank might be its largest real estate bear after last month\u2019s sales. This week RBC explained to investors that a Canadian real estate correction is here. Following downward revisions to the bank\u2019s forecast, key markets reported further erosion. They see the correction spreading wider, and may be the deepest in half a century.<\/p>\n<p style=\"text-align: justify;\"><strong>Canadian Real Estate May See The Deepest Correction In 50 Years<\/strong><\/p>\n<p style=\"text-align: justify;\">Key Canadian real estate markets reported last month\u2019s sales, and the data wasn\u2019t great. Toronto and Vancouver both reported sharp drops in sales and price, as we\u2019ve discussed this week. Other large markets are also starting to show eroding exuberance as well.<\/p>\n<p style=\"text-align: justify;\">\u201cThe housing correction now runs far and wide across Canada,\u201d said Robert Hogue, assistant chief economist at RBC. \u201cIn the Toronto and Vancouver areas, the decline in activity is quickly becoming one of the deepest of the past half a century.\u201d<\/p>\n<p style=\"text-align: justify;\">Higher interest rates were the catalysts for the correction, according to the bank. However, the sudden realization that prices can\u2019t rise forever has tempered exuberance. After such a rapid climb, buyers aren\u2019t likely to respond very quickly to falling prices.<\/p>\n<p style=\"text-align: justify;\">RBC suggests markets that have seen smaller price growth may be better off, but that\u2019s a big maybe. Even more affordable markets like Calgary and Montreal are feeling the impact.<\/p>\n<p style=\"text-align: justify;\"><strong>Not Just Toronto and Vancouver, But Smaller Markets Are Slowing<\/strong><\/p>\n<p style=\"text-align: justify;\">Key indicators for Toronto and Vancouver real estate show a correction has begun. Hogue says Toronto is now the slowest in at least 13 years, excluding April 2020 lockdowns. In addition, active listings are up 58% and Toronto\u2019s MLS HPI down 13% since March \u2014 about $178,000 lower. Just the drop in July was $47,000, and the market has only been in free fall for a few months. Already sentiment has turned on a dime.<\/p>\n<p style=\"text-align: justify;\">Vancouver real estate is doing only slightly better, according to the bank. Seasonally adjusted activity is down 40% over the past four months, according to the bank. Greater Vancouver home prices have dropped 4.5% ($57,000) since April. It might sound small so far in contrast to Toronto, but RBC sees that changing soon.<\/p>\n<p style=\"text-align: justify;\">\u201cWe think this correction [in Vancouver] is still in its early stage. Buyers in the Greater Vancouver area\u2014the most sensitive to interest rates in the country\u2014face further pressure as the Bank of Canada pursues its hiking campaign and affordability reaches suffocating levels,\u201d says Hogue.<\/p>\n<p style=\"text-align: justify;\">More affordable large markets weren\u2019t expected to see much of a slowdown, but it may not be the case now. Calgary home prices reached a cyclical peak in April, explains the bank. Montreal has yet to release<\/p>\n<p style=\"text-align: justify;\">MLS HPI data for July, but the bank sees the median price as a turning point.<\/p>\n<p style=\"text-align: justify;\">\u201cThis development took place across the region, suggesting a broad-based price correction may be underway,\u201d he warns. Adding, \u201cWe expect property values will continue to ease in the near term as the market adjusts to higher interest rates.\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Canadian Real Estate Correction To \u201cIntensify and Spread\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">The correction has barely made a dent in recent gains, but is expected to pick up speed in the coming months. The bank is forecasting the Bank of Canada will hike rates by another 75 basis points in the Fall. It\u2019s expected to \u201ckeep chilling\u201d the market, as inflation forces more credit throttling.<\/p>\n<p style=\"text-align: justify;\">\u201cWe expect the downturn to intensify and spread further as buyers take a wait-and-see approach while ascertaining the impact of higher lending rates.\u201d<\/p>\n<p style=\"text-align: justify;\">The data comes a few days after RBC made downward revisions to its Canadian real estate forecast. Typically the country\u2019s markets have been resilient in a downturn. Markets have managed to avoid any significant national price correction since the 90s. The bank warns that luck has run out.<\/p>\n<p style=\"text-align: justify;\">RBC now forecasts a \u201chistoric\u201d correction for Canadian real estate. It might sound like bad news, especially for one of the country\u2019s largest mortgage lenders. However, they don\u2019t see it that way. They said it should be a \u201cwelcome\u201d event after the run over the past two years. Higher shelter costs have been diverting capital from the productive economy. This will lead to a permanent slowdown for economic growth, which is much worse than a few points off housing.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/betterdwelling.com\/canadian-real-estate-correction-is-becoming-the-deepest-in-half-a-century-rbc\/\" target=\"_blank\" rel=\"noopener\">RBC : Canadian Real Estate Correction is Becoming The Deepest in Half A Century<\/a> by Daniel Wong | Better Dwelling<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada\u2019s largest bank might be its largest real estate bear after last month\u2019s sales. This week RBC explained to investors that a Canadian real estate correction is here. Following downward &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/08\/the-housing-correction-now-runs-far-wide-across-canada\/\">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-20393","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Housing Correction Now Runs Far &amp; Wide Across Canada &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/08\/the-housing-correction-now-runs-far-wide-across-canada\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"The Housing Correction Now Runs Far &amp; Wide Across Canada &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Canada\u2019s largest bank might be its largest real estate bear after last month\u2019s sales. 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