Housing market update – May 2023

House prices in Canada may finally have bottomed out after months of falls, but sales and listings remain weak. Meanwhile, rents are performing more strongly, with big rises in many Ontario metros.

• Home prices are still stabilizing after big falls over the last year. The Canadian Real Estate Association’s (CREA) monthly Multiple Listing Service (MLS) Home Price Index showed a 0.2% month-on-month rise in March. However, year-on-year prices are still down by 15.5%.
• CREA now projects that prices will end the year 4.8% lower than in 2022, then grow by 4.7% next year. That’s a more conservative estimate than the one from the Canadian Mortgage and Housing Corporation (CMHC), which expects prices to remain below pre-pandemic levels this year and then bounce back 7.9% in 2024. CMHC also predicts that prices will bottom out in Q1 2023 and then return to growth.
• Sales activity is still well below last year’s figures. According to CREA, 34.4% fewer homes were sold in March 2023 than in March 2022. The silver lining is that seasonally adjusted sales were up 1.1% month on month.
• There are also fewer new houses coming into the pipeline. Housing starts in March fell to 213,865, the lowest level since June 2020 during the COVID-19 pandemic.
• As sales activity falls, some developers are taking drastic steps to drum up demand. In Toronto, buying a new condo could earn you cash incentives or even a new car. Condo sales in the Greater Toronto Area have fallen 74% compared to Q1 2022, and inventory is at a seven-year high.
• While it’s getting harder to sell a condo, multifamily rents are growing. Yardi’s latest multifamily report found year-on-year rental growth of 5.6% Canada-wide in Q1, more than double the 2.7% measured in Q1 last year. Ontario markets including Toronto, Hamilton and the Kitchener-Cambridge-Waterloo region all grew faster than average, while London had the highest rent increases of any Canadian metro.