Toronto area: Activity tumbles to new cycle low<\/h2>\n
Market participants\u2019 focus shifted sharply from declining interest rates (a morale booster) to the threat of a trade war in the past month. A series of major snow storms also likely made house hunting more difficult.<\/p>\n
These factors contributed to home resales tumbling 29% seasonally adjusted between January and February\u2014the biggest one-month drop since the early days of the pandemic. The level is the lowest this cycle. The turn of events raises serious questions about the market\u2019s ability to continue on its bumpy recovery path in the near term.<\/p>\n
Earlier rises in property listings have markedly boosted supply, putting buyers in a strong position to extract price concessions from sellers. Toronto\u2019s composite MLS HPI fell a hefty 1.5% from January to February. The index is down 1.8% from a year ago with condo prices accounting for much of the decline. The condo segment has contended with a wave new completions in the past year, while many investors moved to the sidelines. Downward price pressure could intensify if the trade war causes job losses and other material economic damage. <\/p>\n
Montreal area: Trade anxiety, storms take a toll<\/h2>\n
Trade war-related anxiety and big snow storms also took a toll in Montreal in February. They contributed to the biggest drop in transactions in four years, down an estimated 11% from January (seasonally adjusted).<\/p>\n
This put a sudden halt to a long, sustained rebound since 2023 that had returned activity to pre-pandemic levels at the start of this year.<\/p>\n
Supply-demand conditions are now easing, but they remain relatively tight. Earlier brisk demand and levelling inventories increased competition between buyers and turned up the heat on prices.<\/p>\n
Median prices for single-family homes and condo apartments are up solidly from year-ago levels\u20148.9% and 6.3%, respectively.<\/p>\n
We expect some of this heat will dissipate in the period ahead and the pace of appreciation will moderate. Any sizable economic shock ensuing from the trade war could accelerate this cooling. <\/p>\n
Vancouver area: Setback rekindles downward price pressure<\/h2>\n
The market recovery in the Vancouver area had a significant setback in February, and we estimate homes resales fell more than 15% from January (seasonally adjusted). This essentially reverses the progress made in activity the past six months.<\/p>\n
Both buyers and sellers seem to have retreated last month\u2014likely unnerved by the threat of a trade war\u2014but the prior inventory rebuild has left the market well supplied relative to current soft demand.<\/p>\n
Mild downward price pressure has also been rekindled. The Vancouver-area MLS HPI slipped 1.1% from a year ago in February after rising slightly higher in the previous two months. Most of the softening has occurred in the condo segment where the index is down 2.8% as detached home values continue to slowly appreciate, up 1.8%.<\/p>\n
Trade turbulence clearly adds downside risks to activity and property values for a market that was already challenged by extremely strained affordability.<\/p>\n
Calgary: In cooling mode<\/h2>\n
Calgary\u2019s market was also shaken up last month by looming U.S. tariffs. Resale activity dipped roughly 12% from January (seasonally adjusted), while still running at a historically robust level. This represented the steepest decline in 16 months.<\/p>\n
With inventory rebuilding over the past year\u2014thanks in part to strong housing construction\u2014the market is now more balanced after being among the tightest in the country over the better part of the last four years.<\/p>\n
This shift has considerably lowered the heat on prices. Calgary\u2019s composite MLS HPI is up just 0.9% from a year ago. That\u2019s markedly down from nearly 11% in spring 2024.<\/p>\n
We expect further cooling while the trade war with the U.S. heightens economic worries.<\/p>\n
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