Canada’s Greatest Housing Bubbles: March Housing Bust Update

Year-on-year, house prices fell by the most on record, as the seasonal increase in prices was far less than a year ago.

By Wolf Richter for WOLF STREET.

This is the beginning of the spring selling season. So let’s see. Home sales in Canada rose 2.3% in February from January, but it was less of an increase than it should have been, and on a year-over-year basis, sales fell 40% compared to January’s 37% decline.

The prices of single-family houses rose by 1.2 per cent in February. But that paled in comparison to the 4.8% monthly jump a year ago.

So year-over-year, prices fell 18.5%, the biggest drop in the data, according to the Canada Home Price Benchmark Index for single-family homes from the Canadian Real Estate Association (CREA). Since the peak in March last year, the index has plunged by 19.1 per cent.

Against the Canadian dollar, the single-family home price index for Canada rose C$8,900 in February from January, but that was small compared to the C$44,000 increase a year ago, and so year-over-year the benchmark price fell. up a record 18.5% to C$781,300, rolling the price back to July 2021.

Hangover after free money binge. This most ridiculous housing price bubble was triggered by the most ridiculous money printing and interest rate suppression globally and in Canada. But now consumer price inflation is tearing up this strategy, as it always eventually does. And the Bank of Canada has now raised its main policy rate by 425 basis points to 4.5%. And its quantitative tightening is in full swing. As a result, mortgage rates have risen across the board from the level of a year ago.

Canada’s housing market wasn’t even much of a reset during the financial crisis—unlike the U.S. housing market—and a magnificent housing bubble deflated it.

Greater Toronto Area: The MLS Home Price Index for single-family homes rose 1.6% or CAD 21,000 in February from March to 1.294 million. C$. But this was only about a quarter of the C$80,000 month-on-month jump a year ago. So year-over-year, the index fell by 19.3%, or by $306,800, both the largest year-over-year declines ever:

Greater Vancouver: The MLS Home Price Benchmark Price for single-family homes rose 0.7% or C$12,000 in February from January to C$1,812 million. But the month-over-month jump pales in comparison to the C$80,000 jump in February 2022. So year-over-year, the index fell 12.0%:

  • From peak in April 2022: -13.7%
  • Year-over-year: -12.0%
  • Fall in 10 months from April 2022 peak: -C$288,000

Victoria: The single-family benchmark price fell 0.4% for the month, despite the spring selling season, to C$1.113 million:

  • From peak in June 2022: -14.5%
  • Year-over-year: -5.7%
  • Drop in 8 months from June 2022 peak: -C$162,200

Hamilton-Burlington Metro: The single-family benchmark price rose 3.1% for the month to C$898,000. But the month-on-month jump was smaller than the 5.3% jump a year ago, so the year-on-year decline widened to 23%.

  • From peak in February 2022: -23%
  • Year-over-year: -23%
  • Decline in 12 months from February 2022 peak: -C$268,300.

Ottawa: The benchmark price of single-family homes rose 1.3%% for the month to C$688,500. But last year in February prices rose by 5.0% and the year-on-year decline worsened to 15.0%:

  • From peak in March 2022: -16.7%
  • Year-over-year: -15.0%
  • Decline in 11 months from March 2022 peak: -C$137,700:

Calgary: The single-family benchmark price jumped 1.7% for the month to C$584,700. But that was much less than the 6.6% month-on-month jump last February, and so the year-on-year increase was cut to just 2.2% (from 7.1% in January):

  • From peak in May 2022: -2.4%
  • Year-on-year: +2.2%
  • Fall in 9 months from May 2022 peak: -C$14,100.

Montreal: Single-family benchmark price rose 1.1% for the month to C$589,500:

  • From peak in May 2022: -9.9%
  • Year-over-year: -6.9%
  • Fall in 9 months from May 2022 peak: -C$65,000

Halifax-Dartmouth: The single-family benchmark price fell 1.6% for the month, negating most of the gain in January to C$491,400:

  • From peak in May: -12.0%
  • Year-on-year: +3.1%
  • 9-month decline since peak in May: -C$67,100

Quebec City area: The single-family benchmark price rose 4.2% to C$361,500, almost but not quite undoing the decline in January:

  • From peak in May: -6.7%
  • Year-over-year: -1.8%
  • 8-month decline since peak in May: -C$26,000.

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