Canada's Housing Market in a Slump: Insights from CREA's Latest Report

The Current State of the Market

The Canadian housing market is experiencing a noticeable downturn. Recent data from the Canadian Real Estate Association (CREA) highlights a reduction in property listings and sales, continuing a downward trend that's been evident over the past few months. This decline is significant, as it reflects broader economic and social factors impacting the housing sector.

Listings and Sales Ratios: Indicators of Market Health

October saw a 2.3% fall in new listings, leading to a sales-to-new listings ratio of 49.5% — a 10-year low. This ratio is crucial in gauging market conditions. A lower percentage typically indicates a buyer's market, where buyers have more options and bargaining power due to a surplus of listings. In contrast, a higher percentage signals a seller's market. The long-term average ratio in Canada is around 55%, and it's essential to track these shifts to understand where the market is heading.

Regional Variations and Price Trends

Despite the overall slump, October 2023's home sales were marginally higher (0.9%) than in October 2022. However, average home prices saw a modest decline of 0.8% compared to the previous month. These figures suggest a nuanced picture, with regional variations playing a significant role. For instance, price declines have been primarily observed in Ontario, with emerging signs of softening in British Columbia. Yet, on a yearly comparison, the national average home price was about $656,000 in October, marking a 1.8% increase from the previous year.

Provincial Highlights

Interestingly, the housing market isn't uniformly sluggish across all provinces. For example, New Brunswick reported a significant increase of over 12% in the average residential price compared to October 2022. In contrast, Newfoundland and Labrador witnessed a 2% decrease in pricing. Such disparities underscore the diverse economic and demographic factors influencing regional markets.

Inventory and Future Outlook

As of the end of October 2023, the "months of inventory" metric — the time it would take to sell current listings at the ongoing sales pace — stood at 4.1 months. This figure provides insight into market balance and potential future trends.

Looking ahead, CREA's senior economist Shaun Cathcart predicts that the housing demand, which remains high, might not translate into increased activity in the existing home market until at least spring 2024. A lot depends on the Bank of Canada's interest rate decisions, which could either spur or dampen market activity.

The Canadian housing market's current state is a complex interplay of economic, regional, and policy factors. While there's a general trend of slowing down, regional disparities and future economic policies will significantly influence the market's trajectory. Stakeholders, including buyers, sellers, and policymakers, must keep a close watch on these evolving dynamics to make informed decisions.