The wind is definitely shifting\u2014and becoming a lot chillier\u2014for Canada\u2019s housing market. Toronto, Vancouver, Montreal, Ottawa and Hamilton were among the areas experiencing significant pullbacks in home resale activity in May. For many of them this represented the third-straight month of decline. Clearly the Bank of Canada\u2019s interest rate hikes since March\u2014and the prospects for more in the months ahead\u2014are changing the game in a big way. They\u2019re considerably raising the bar for buyers, and dragging down earlier (super) bullish sentiment in the process. <\/p>\n
With demand softening, inventories are now on the rise in some markets (including Toronto and Montreal). This is quickly easing what were extremely tight demand-supply conditions just a few months ago. In fact, most major markets in Canada have returned to balanced territory in May based on sales and new listings reported by local real estate boards. <\/p>\n
The chillier wind brought home prices lower in many markets last month. This group included Toronto, Vancouver and the Fraser Valley. We expect further reversal of the massive pandemic-era gains in these and other markets in the period ahead. Interest rate hikes straining affordability and weighing on property values, especially in expensive markets.<\/p>\n