July 2023 proved to be another pivotal month for the Canadian housing market, as various trends started to surface, indicating both challenges and slight upsides for homebuyers and sellers.
According to the latest report from the Canadian Real Estate Association (CREA), home sales fell by 0.7% in July compared to June, signaling caution among potential buyers.
Despite this monthly decline, yearly comparisons reveal a different picture: sales were up 4.8% from the same month last year, showcasing a recovering market.
The national average home price adjusted to $667,317, which marks a minor decrease of 0.2% from July 2022.
Interestingly, the number of newly listed properties rose by 0.9%, driven mainly by fresh listings coming out of Calgary.
At the same time, the overall inventory on the Canadian Multiple Listing Service (MLS) grew significantly, up by 22.7% from last July, though still trailing behind historical averages for the month by about 10%.
CREA’s senior economist, Shaun Cathcart, noted, “Considering the massive swings in prices, activity and interest rates in recent years, this is an outcome the industry should be thrilled with.”
High-priced markets, particularly in Ontario and British Columbia, are still feeling the pressure, as many potential buyers are finding it hard to qualify for mortgages due to elevated interest rates.
This disinterest stems primarily from the fact such rates influence variable-rate mortgages more directly, and currently, these are the more costly option.
The trends are mixed across various provinces; Edmonton and Hamilton-Burlington saw increases in home sales, contrasting sharply with declines reported from the Greater Toronto Area and Calgary.
Would-be homebuyers, already stretched thin by costlier mortgages, are cautiously eyeing upcoming interest rate reductions from the Bank of Canada, which have yet to translate to more accessible financing.
With the Bank of Canada cutting rates twice in recent months—once to 4.75% and then to 4.5%—predictions suggest these decisions will eventually entice homebuyers back to the market, especially as economic conditions continue to shift.
Forecasts from analysts indicate the possibility of more interest rate cuts before year-end, creating speculation and buzz about affordability improvements for new home buyers.
Further nuances in the housing market became evident when observing specific locales like Ascension, East Baton Rouge, and Livingston parishes, where pending sales tumbled by 11.7%.
Also, the number of closed sales across these parishes did show some optimism, rising by 3.6%, demonstrating varied performance levels even within regions.
Interestingly, the data indicates not only price fluctuations but also the speed of sales; homes spent 70 days on the market on average, indicating increasing complexity and hesitancy among buyers.
Overall, the median price for homes across the newly analyzed parishes increased by 6.3% to $268,000, with substantial year-to-year jumps particularly noted in Ascension County.
This area marked the most significant leap with median prices soaring by 13.8%, raising them to $335,050.
For those less fortunate, such as buyers within Livingston County, the median price saw declines, highlighting the mixed bag this evolving market presents.
Tom Cook, of Cook, Moore, Davenport & Associates, shared insights on current trends, emphasizing the cautious approach builders are taking with lot purchases and awareness of declining buyer enthusiasm.
