Toronto area: Standing still<\/h2>\n
Potential buyers are still hunkered down, waiting for better deals on either price or interest rates (or both). A sharp rise in listings this year may have resolved severe inventory shortages that prevailed earlier but so far failed to unlock the market. Home resales barely budged between July and August, edging up just 0.6% on a seasonally adjusted basis\u2014and still an astounding 32% below pre-pandemic levels. And home prices were unchanged between the two months at a hefty $1.09 million for the MLS HPI benchmark. Affording what remain very high price points is the main challenge for buyers. Even the relatively cheaper categories like condo apartments (the average price of which is running closer to $668,000 in the region) are out of reach for many. This leaves the market in a standstill. Sellers are holding firm on their asking price and buyers feel no urgency (or are unable) to bid. But sellers may become more amenable to make concessions as the balance between supply and demand now heavily favour buyers, especially in the condo segment. A wave of new condo completions this year may and concomitant surge in condo inventories may pull prices down somewhat in the near term. We expect sales momentum to build gradually in the period ahead as interest rates continue to fall. <\/p>\n
Montreal area: Long road ahead but recovery progressing<\/h2>\n
The market continued to slowly recover in August. We estimate home resales advanced more than 2% from July, and property values remain on an appreciating path. Median prices were up 5.2% from a year ago for single-family homes and 3.6%for condo apartments last month\u2014both representing slight moderations from July. There\u2019s a long road ahead in this recovery process, though. The number transactions in August was still 15% short of the volume recorded just before the pandemic. We expect the recent rising trends to persist in the near term as the Bank of Canada cuts rates further and supply-demand conditions stay in balance (if marginally tight). Inventories have been gradually rebuilding across the entire region, yet remain historically low\u2014pointing to further (modest) price appreciation in the coming months. <\/p>\n
Vancouver area: Stuck in a low gear<\/h2>\n
Action has yet to pick up in a material way from the cyclical trough. We estimate home resales dipped 4% between July and August (seasonally adjusted)\u2014extending this year\u2019s succession of monthly up and down movements that have dragged down the pace of recovery. Inventories, however, are now more plentiful with sellers coming to market in greater numbers. This affords time to buyers to make purchasing decisions and tilt pricing power in their favour. The result so far has been a leveling off of prices. The area\u2019s composite MLS HPI benchmark ($1.20 million in August) has remained little changed over the first eight months of this year. It\u2019s now down a slight 0.9% from a year ago. If anything, we see some downward pressure potentially building in the period ahead. Affordability is still among the worst in anywhere anytime in Canada, and no doubt buyers will want to take advantage of their stronger bargaining position. A material drop in rates will eventually alleviate tensions all round, but that is likely months away. <\/p>\n
Calgary: More sellers help rebalance a very tight market<\/h2>\n
The main story in August was a big jump in new listings (up 13% from a year ago). The development is line with trends in other markets this year as sellers have come out of the woodwork\u2014many of them had previously stepped to the sidelines while the Bank of Canada aggressively hiked interest rates. If sustained, the larger flow of new listings will help rebalance what has been a super-tight market for some time. This would ease the intense upward pressure that\u2019s driven up prices considerably in the past four years (with just a short reprieve in the second half of 2022). Indeed, some deceleration is already perceptible. The annual rate of increase in the composite MLS HPI has moderated since March, reaching 6.3% in August. We think there\u2019s some room for further moderation as the market rebalances but low inventories are likely to keep the pace robust. Resale activity has remained relatively steady since spring. We estimate it inched 1.5% higher in August from July (seasonally adjusted). Calgary is among the few markets in Canada where the volume of resales is far above pre-pandemic levels. We expect historically strong activity to persist in the face of booming housing demand driven by explosive population growth. <\/p>\n
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