Inflation and Rising Interest Rates Create Caution in The Housing Market

Inflation and rising interest rates continue to dominate headlines, leading many buyers and sellers to assess how these factors impact their housing options. With sales remaining near historic lows, the number of active listings continues to inch upward, causing home prices to recede from the record highs set in the spring of 2022.

Ontario - Resale Market’s Adjustment and Correction Continues

Toronto, 02 November 2022 -- Despite the continued housing market transition to a higher borrowing cost environment, the average selling price in the Greater Toronto Area (GTA) found some support near $1.1 million since the late summer. GTA home sales continued to adjust to substantially higher interest rates in October 2022, both on an annual and monthly basis. However, new listings are also down year-over-year and month-over-month. The persistent lack of inventory helps explain why the downward trend in home prices experienced in the spring has flattened over the past three months.

GTA REALTORS® reported 4,961 sales through the Toronto Regional Real Estate Board’s (TRREB) MLS® System in October 2022 – a similar number to September 2022 but down by 49.1qaqadevdevdeNAQ  compared to October 2021. Yearover-year sales declines were similar across major market segments.

New listings were down by 11.6% year-over-year and reached an October level not seen since 2010. New listings were down on an annual basis more so for mid-density and high-density home types, which helps to explain why prices have held up better in these categories compared to detached houses.

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households,” said TRREB President Kevin Crigger.

The MLS® Home Price Index (HPI) Composite Benchmark was down by 1.3% year-over-year in October 2022. The average selling price for all home types combined, at $1,089,428, was down by 5.7% compared to October 2021. The monthly trends for both the MLS® HPI Composite and the average selling price have flattened in recent months following steeper declines in the spring and early summer.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,” said TRREB Chief Market Analyst Jason Mercer.


Ottawa - Resale Market’s Adjustment and Correction Continues

Ottawa, November 3, 2022 -- Members of the Ottawa Real Estate Board sold 987 residential properties in October through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,670 in October 2021, a decrease of 41%. October’s sales included 758 in the residential-property class, down 40% from a year ago, and 229 in the condominium-property category, a decrease of 44% from October 2021. The five-year average for total unit sales in October is 1,554.

“After the volatility of the past two pandemic years, which was unsustainable, the market is correcting and adjusting,” says Penny Torontow, Ottawa Real Estate Board President. “The slowdown is compounded by Bank of Canada interest rate increases, which further exacerbates buyer hesitancy and weakens people’s purchasing power—especially first-time homebuyers.”

“Demand is still high, and with increasing inventory available, Buyers have more choices and time to shop for their new home. However, the ongoing speculation about where prices and interest rates are headed shakes consumer confidence and has made some prospective Buyers take a wait-and-see approach.”

“Sellers may be understandably concerned about market fluctuations, which have been more drastic lately,” she adds. “As with any major investment, a longer-term perspective is important. The significant year-over-year gains of the last two years were not sustainable. If you have owned your property for any length of time, your equity has increased significantly and will buffer price corrections. If you buy and sell in the same market, it is all relative.”

Months of Inventory for the residential-class properties has increased to 3.3 months from 1 month in 2021.

Months of Inventory for condominium-class properties has increased to 3 months from 1.2 months in 2021.

October’s new listings (2,047) were 4% higher than 2021 (1,960) and down 14% from September 2022 (2,371). The 5-year average for new listings in October is 1,971.

“Buyers and Sellers need to carefully analyze their own unique circumstances. No one can predict with absolute certainty what will happen next year, but in the highly employed and stable Ottawa market, real estate has been and continues to be a good investment over time,” says Torontow. “They don’t have a crystal ball, but mortgage brokers and REALTORS® have the education, expertise—and most importantly, the data—to help people make an informed decision for their specific situation.”

The average sale price for a condominium-class property in October was $445,691, an increase of 9% from 2021.

The average sale price for a residential-class property was $677,873, decreasing 5% from a year ago.

With year-to-date average sale prices at $780,390 for residential units and $456,470 for condominiums, these values represent an 8% increase over 2021 for residential-class properties and a 9% increase for condominium-class properties.

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 5,186 properties compared to 4,012 last year at this time.


British Colombia - Inflation and  interest rates create caution in Metro Vancouver’s housing market

Metro Vancouver, 5 Nov 2022 -- Home sale activity across the Metro Vancouver* housing market continued to trend well below historical averages in October.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,903 in October 2022, a 45.5% decrease from the 3,494 sales recorded in October 2021, and a 12.8% increase from the 1,687 homes sold in September 2022.

Last month’s sales were 33.3% below the 10-year October sales average.

"Inflation and rising interest rates continue to dominate headlines, leading many buyers and sellers to assess how these factors impact their housing options. With sales remaining near historic lows, the number of active listings continues to inch upward, causing home prices to recede from the record highs set in the spring of 2022."

Andrew Lis, REBGV Director, economics and data analytics

There were 4,033 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2022. This represents a 0.4% decrease compared to the 4,049 homes listed in October 2021 and a 4.6% decrease compared to September 2022 when 4,229 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,852, a 22.6% increase compared to October 2021 (8,034) and a 1.2% decrease compared to September 2022 (9,971).

“Recent years have been characterized by a frenetic pace of sales amplified by scarce listings on the market to choose from. Today’s market cycle is a marked departure, with a slower pace of sales and more selection to choose from,” Lis said. “This environment provides buyers and sellers more time to conduct home inspections, strata minute reviews, and other due diligence. With the possibility of yet another rate hike by the Bank of Canada this December, it has become even more important to secure financing as early in the process as possible.”

For all property types, the sales-to-active listings ratio for October 2022 is 19.3%. By property type, the ratio is 14.3% for detached homes, 21.6% for townhomes, and 23.2% for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,148,900. This represents a 2.1% increase from October 2021, a 9.2% decrease over the last six months, and a 0.6% decrease compared to September 2022.

Sales of detached homes in October 2022 reached 575, a 47.2% decrease from the 1,090 detached sales recorded in October 2021. The benchmark price for a detached home is $1,892,100. This represents a 1.6% increase from October 2021 and a 0.7% decrease compared to September 2022.

Sales of apartment homes reached 995 in October 2022, a 44.8% decrease compared to the 1,801 sales in October 2021. The benchmark price of an apartment home is $727,100. This represents a 5.1% increase from October 2021 and a 0.2% decrease compared to September 2022.

Attached home sales in October 2022 totalled 333, a 44.8% decrease compared to the 603 sales in October 2021. The benchmark price of an attached unit is $1,043,600. This represents a 7.1% increase from October 2021 and a 0.5% decrease compared to September 2022.


Alberta - Sales remain stronger than pre-covid levels

City of Calgary, Nov. 1, 2022 – October sales eased compared to last year’s levels, mostly due to slower activity in the detached sector.

However, with 1,857 sales this month, levels are still stronger than long-term trends and activity reported prior to the pandemic. Year-to-date sales have reached 26,823 and with only two months to go, 2022 will likely post a record year in terms of sales.

“Calgary hasn’t seen the same degree of pullback in housing sales like other parts of Canada, thanks to persistently strong demand for our higher density product,” said CREB® Chief Economist Ann-Marie Lurie. “While our city is not immune to the impact that inflation and higher rates are having, strong employment growth, positive migration flows and a stronger commodity market are helping offset some of that impact.”

New listings also trended down this month causing the sales-to-new-listings ratio to rise to 85% and inventories to trend down. Much of the inventory decline has been driven by products priced below $500,000.

While conditions are not as tight as what was seen earlier in the year, with only two months of supply, conditions remain tighter than historical levels. We are also seeing divergent trends in the market with conditions continuing to favour the seller in the lower-price ranges and shifting to more balanced conditions in the upper-price ranges.

As of October, prices have eased by four% relative to the highs reached in May. This is considered a relatively small adjustment when considering price movements in other large cities. It is also important to note that the October benchmark price is still nearly 10% higher than the levels reported last year.

Oct 2023 stats

Detached:  Sales growth in the over $700,000 price range this month was not enough to offset the declines in the lower-price ranges, causing detached sales to ease by over 29% compared to last year. Limited supply growth in the lower-price ranges continues to keep conditions exceptionally tight for lower-priced detached homes.

In October, inventory levels for detached homes were under 2,000 units, nearly 35% lower than typical levels reported for the month. Moreover, over 42% of the inventory falls in the upper-price ranges of the market. This is likely creating a situation where pricing trends will vary depending on price range.

Overall, detached prices did trend down relative to last month and peak levels in May but remain nearly 12% higher than levels reported last October. The strongest year-over-year price gains have occurred in the North and South East districts.

Semi-Detached: While sales remain lower than last year’s levels in October, recent pullbacks have not offset gains from earlier in the year and year-to-date sales improved by nearly three%. A pullback in new listings relative to sales caused the sales-to-new-listings ratio to push above 80% this month and inventories to ease, leaving the months of supply just over two months.

The benchmark price, while easing slightly compared to last month, remained over nine% higher than last year’s levels. Year-over-year price gains have varied from a low of nearly eight% in the City Centre to a high of 16% in the North district.

Row: Row sales continue to rise relative to last year supporting a year-to-date gain of nearly 42%. At the same time, new listings this month eased ensuring that the sales-to-new-listings ratio remains exceptionally tight at 106%. Falling inventories and improving sales have ensured this market continues to favour the seller with less than two months of supply. This has also prevented the same adjustment in price.

As of October, the benchmark price was $361,200, less than one% lower than the peak achieved in June of this year. Overall, prices remained nearly 15% higher than last year’s levels. The strongest price gains occurred in the South East, North East and North districts.

Apartment Condominium: Apartment sales continue to rise over levels reported last year contributing to the year-to-date increase of over 56%. Improving sales was also met with gains in new listings, but as the growth in sales outpaced the new listings activity, inventory levels continue to trend down. As of October, the months of supply remained just below three months, the lowest level recorded in October since 2013.

In October, the benchmark price was $277,800, similar to last month and nearly 11% higher than last year’s levels. Some of the strongest price gains have occurred in areas outside of the City Centre. Despite persistent price growth, overall prices remain nine% below previous highs set back in 2014.


Airdrie: Easing sales over the past several months have not been enough to offset earlier gains as year-to-date sales reached 2,269 units, over 11% higher than last year and on pace to hit a new record high. The growth in sales was possible thanks to a boost in new listings this year. However, the gains in new listings did little to impact inventory levels which remained well below levels traditionally seen in the market in October.

While conditions are not as tight as they were earlier in the year, the months of supply remained exceptionally tight at one and a half months. Despite persistently tight conditions, prices have trended lower from the earlier highs. Airdrie hit a record high price back in April of this year at $510,700, prices have since fallen by six% since then yet remain over 14% higher than levels reported last year.

Cochrane: A pullback in new listings relative to sales activity caused the sales-to-new-listings ratio to push up to 90% once again, causing inventories to trend down relative to last month. While overall inventories still remain higher than the exceptionally low levels seen last year, levels are still well below what is typically seen in the market.

While prices have eased off recent highs, at a benchmark price of $507,000, prices remain over 16% higher than last year's levels. Price growth has been mostly driven by the detached and semi-detached sector which have reported year-over-year gains exceeding 18%.

Okotoks: A pullback in new listings likely weighed on sales this month as the sales-to-new-listings ratio pushed above 100% causing inventories to remain exceptionally low for October. While conditions are still not as tight as they were earlier in the year, the shift this month did little to support more balanced conditions.

Persistently tight conditions did slow the pace of adjustment in prices as the benchmark price was $537,800 in October. While prices have eased from the high reported in May, they remain over 11% higher than last year's levels.

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