Spring Housing Market Shows Slow Bloom

Just as Toronto's cherry blossoms peaked in late April and early May, the Canadian housing market typically follows suit. This year, however, the market remained sluggish despite the blossoms, awaiting an economic boost, potentially from an anticipated interest rate cut in June. April's data from the Canadian Real Estate Association (CREA) revealed a 1.7% drop in sales compared to March. Sales have stayed below the 10-year monthly average since the Bank of Canada's rate hikes began in early 2022. Meanwhile, new listings rose by nearly 3% month-over-month, with Toronto seeing a striking 47.2% increase compared to April last year.

With a record number of listings since the pandemic began and slower sales, buyers are now in a strong position to negotiate, while sellers must adjust their expectations. On a brighter note, April sales were 10.1% higher than the same month in 2023, showing potential for recovery if interest rates remain favorable. CREA’s Home Price Index Benchmark Price, which adjusts for changes in home types and sizes, remained flat month-over-month and down 0.6% year-over-year.

Regional markets in the Maritimes, Quebec, Prairies, and Rockies showed strength. Moncton prices rose 12.2% year-over-year, Halifax by 4.3%, Montreal by 3.3%, and Quebec City by 7.2%. Calgary and Edmonton also saw price increases of nearly 10% and 5.6%, respectively. Greater Toronto's market, however, showed weakness, with prices slightly down from last year. Toronto’s high prices mean that any upward trend depends on lower mortgage rates. The market here is divided: the city (416) saw a 9.5% drop in condo sales, while suburban (905) markets saw only a 0.4% decline. Detached home sales in the suburbs fell by 9%.

John Asher, co-founder of a Toronto-based real estate platform, highlights a "buyers’ market" trend in Toronto's condo sector, with rising listings and increased cancellations, indicating seller frustration. Investment properties, especially condos, face challenges with higher interest rates, leading to the lowest April condo sales in Toronto since 2017, excluding the pandemic-hit 2020. Despite the current slowdown, a timely reduction in mortgage rates could revitalize the market this summer, much like the inevitable return of cherry blossoms next spring.