The pandemic may not be over but the pandemic-era housing market boom certainly is. Since the Bank of Canada began hiking its policy rate in March, home resales have fallen 31% and (benchmark) prices almost 6% nationwide, including monthly declines of 5.3% and 1.7%, respectively, in July. Most of Ontario and British Columbia have seen even greater drops. And the bottom is likely many months away still as our central bank has more work to do\u2014we expect a further 100 basis-point rate increase to 3.5% by the fall. With the balance of power having dramatically shifted in their favour, buyers will be in a position to continue extracting price concessions from sellers for some time to come. <\/p>\n
Formerly overheating markets in Ontario and parts of the BC Lower Mainland have been the epicentre of the downturn to date. Cambridge (-17%), Kitchener-Waterloo (-16%), Brantford (-14%), London (-14%) and Guelph (-10%) have experienced the biggest declines in the composite MLS Home Price Index since the February peak. In dollar terms, the loss in value is striking, varying from $95,000 (Guelph) to $166,000 (Cambridge). Prices are also under heavy pressure in the Greater Toronto Area where the composite MLS HPI in down 7% (or $89,000) in the past five months. The Fraser Valley is leading the correction in British Columbia with the composite benchmark price falling 5.6% (or $65,000) since March, slightly more than twice the decline in the Vancouver area.<\/p>\n