Canada’s two largest home markets led the way in a national month-over-month 2.3% increase in sales in February, reports the Canadian Real Estate Association (CREA)..According to their respective real estate boards, sales in the Greater Vancouver Area (GVA) in February reached 1,808 units, up from 1,022 in January. In the Greater Toronto Area (GTA), sales were 4,783 homes up from January’s 3,100 sales. Calgary’s sales went from 1,119 in January to 1,740 in February..“February’s data contained the potential of a more robust market to come, but to repeat the bottom line from last month, we won’t know what the 2023 market has in store until the spring,” says Jill Oudil, chair of CREA..“While we’re not seeing it in the sales or listings data just yet, I would expect homeowners are getting properties ready for the market and prospective buyers are getting mortgage pre-approvals.”.It appears markets have recovered from the housing frenzy brought on by the pandemic, says Shaun Cathcart, CREA’s senior economist..“The similarities between 2023 and the recovery year of 2019 continued to emerge in February, with sales up, the market tightening, and month-over-month price declines getting smaller,” says Cathcart. “But the biggest similarity was a sharp drop in seasonally adjusted new listings. Future sellers, many of whom will also be buyers, are likely biding their time until the optimum time to list and buy something else.” .“For most, that’s in the spring. Will buyers jump off the fence to snap homes up in 2023 once they finally start to hit the market? They did in 2019.”.New listings across the country dropped 7.9% from January, led by double-digit declines in several large markets, particularly in Ontario..The aggregate composite MLS Home Price Index (HPI) was down 1.1% on a month-over-month basis in February, only about half the decline recorded in January and the smallest month-over-month drop since last March, taking the composite to 15.8% below its peak level, reached in February 2022 last year, says Cathcart..“Across the country, prices are down from peak levels by more than they are nationally in most parts of Ontario and a few parts of British Columbia, and down by less elsewhere,” he says..“While prices have softened to some degree almost everywhere, Calgary, Regina, Saskatoon, and St. John’s stand out as markets where home prices are barely off their peaks. Prices began to stabilize last fall in the Maritimes. Some markets in Ontario seem to be doing the same now.”.The national average home price in February was $662,437 up more than $50,000 from January as a result of outsized sales increases in the GTA and GVA Canada’s most active and expensive housing markets. Excluding these two markets from the calculation cuts almost $135,000 from the national average price..Average price comparisons should only be used to get an overview of conditions and do not reflect specific market activity..Year-over-year market comparisons should be avoided because dynamics are decidedly different this year compared to last, but that will soon change, says Penelope Graham, director of content at Ratehub.ca..“This is the last month where market conditions are being compared to a pre-rate-hike environment, as February 2022 is largely recognized as the market’s peak in terms of transactions and prices. The months to follow will provide a clearer picture in terms of how today’s buyers are absorbing the higher interest rate environment,” says Graham..“The national month-to-month picture shows the bottom appears to be in for home prices. There are very early signs the market may be picking up for the spring, with a 1.7% increase compared to January. Sales are also up month over month, which is seasonally typical, but also indicates motivated buyers are coming out in force.”.The recent banking instability in the US and its potential spread to other areas could affect the next rate decisions by the US Fed and Bank of Canada, says Graham..“Bond yields dropped below 3%, and expectations are growing that the US Federal Reserve will hold rates in its next announcement next week, with markets pricing in cuts by this summer,” she says. “This in turn gives the Bank of Canada the breathing room to stick with its own rate hold mandate, or to implement a rate cut in the months to come.”.“Given the pent-up demand among buyers, any improvement in affordability will fuel market activity and put upward pressure on home prices.”
