Housing markets in the country’s largest markets continued to moderate in August, following the Bank of Canada’s recent interest rate hikes over the summer.

What began as a strong spring housing rally has since cooled with more balanced conditions in most markets.

In the Greater Toronto Area, the country’s largest housing market, both prices and sales were little-changed compared to July, while sales are down 5.2% compared to last year and prices just marginally higher.

“Market results…show demand-supply conditions continuing to ease significantly in Vancouver, the Fraser Valley, Toronto and Hamilton,” noted RBC’s Robert Hogue. “Consistent with rebalancing trends, there’s growing evidence this spring’s price rally is running out of steam in Ontario and B.C.”

Continued strength in Alberta

There were some marked differences between regions, however, with greater activity seen in Alberta’s biggest housing markets.

In contrast to slowing activity in places like Vancouver, Toronto and Hamilton, “momentum appears to have persisted in Calgary and Edmonton, likely buoyed by outsized population gains and a relatively strong provincial labour market,” noted Randall Bartlett, Senior Director of Canadian Economics at Desjardins.

However, he adds it’s important to watch the trend with new listings, which have shown a “significant and broad-based rise” in recent months. Unlike the demand-supply tightness seen earlier in the year, and which drove price gains, Bartlett says the rising inventory suggests a “shift in market sentiment.”

“Continuation of this trend would mean more far less sanguine prospects for home values going forward,” he says.

Hogue adds that elevated interest rates, ongoing affordability issues and a looming recession are poised to pose “major obstacles” to the housing market recovery.

“Any material acceleration in the recovery will have to wait until interest rates come down in 2024,” he wrote.

Regional housing market roundup

Here’s a look at the August statistics from some of the country’s largest regional real estate boards:

QUICK LINKS:

• Toronto
• Vancouver
• Montreal
• Calgary
• Ottawa

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Greater Toronto Area

“More balanced market conditions this summer compared to the tighter spring market resulted in selling prices hovering at last year’s levels and dipping slightly compared to July,” said TRREB chief market analyst Jason Mercer.

“As interest rates continued to increase in May, after a pause in the winter and early spring, many buyers have had to adjust their offers in order to qualify for higher
monthly payments,” he added. “Not all sellers have chosen to take lower than expected selling prices, resulting in fewer sales.”

Source: Toronto Regional Real Estate Board (TRREB)

Greater Vancouver Area

“Borrowing costs are fluctuating around the highest levels we’ve seen in over 10 years, yet Metro Vancouver’s housing market bucked many pundits’ predictions of a major slowdown, instead posting relatively strong sales numbers and year-to-date price gains north of 8%, regardless of home type,” said Andrew Lis, REBGV Director of Economics and Data Analytics.

“As fall approaches, sales have caught up with the price gains, but both metrics are now slowing to a pace that is more in-line with historical seasonal patterns, and with what one might expect given that borrowing costs are where they are,” he added.

Source: Real Estate Board of Greater Vancouver (REBGV)

Montreal Census Metropolitan Area

“August is usually one of the least active months of the year. While August 2023 is no exception to the rule, the number of sales is in line with the historical average,” said Charles Brant, Director of the QPAREB’s Market Analysis Department.

“It is interesting to note that prices have not only recovered lost ground compared to the same period last year but are also maintaining levels close to the peak of 2022,” he added. “In a context where interest rates and prices both remain at high levels, a potential deterioration of the job market in the coming months could make this market stabilization more precarious.”

Source: Quebec Professional Association of Real Estate Brokers (QPAREB)

Calgary

“Higher lending rates have caused many buyers to either hold off on purchase decisions or shift toward more affordable products on the market,” said CREB Chief Economist Ann-Marie Lurie.

“The challenge has been the availability of supply, especially in the detached market,” she added. “Inventory levels hit record lows in August, and while new listings are higher than last year, conditions continue to favour the seller, driving further price gains.”

Source: Calgary Real Estate Board (CREB)

Ottawa

“Sales activity was up marginally on a year-over-year basis in August but remained well below the historical average for this time of year,” said OREB President Ken Dekker.

“There is no shortage of demand given increased immigration and the large Canadian population cohort entering the market,” he added. “The lack of suitable, affordable housing is a hindrance. High borrowing costs and economic uncertainty are impacting both sellers and buyers, which we expect will continue to result in further market fluctuations.”

Source: Ottawa Real Estate Board (OREB)