Housing market correction widespread across Canada

Canada’s housing markets are still squarely in correction mode, according to a special report by RBC Economics.

The report said the latest results from local real estate boards confirm activity and prices generally remained under intense downward pressure in November. This was entirely expected considering the heavy toll soaring interest rates are taking on buyers from coast to coast. Higher rates are forcing many of them to put their purchase plans on ice and others to house-hunt on a reduced purchasing budget.

RBC said it thinks this will continue to be the case into the early part of 2023—conditional on the Bank of Canada halting its rate hiking campaign this month.

“For the most part, local market activity is downright soft, at levels far below where they were before the pandemic. Vancouver, the Fraser Valley, Toronto, Hamilton, Ottawa and Montreal are among that group. However, areas of the Prairies (including Calgary and Edmonton) continue to operate above pre-pandemic levels despite the correction that has taken place to date. A stronger provincial economy and rising in-migration are no doubt keeping demand relatively solid in those markets,” said Robert Hogue, Assistant Chief Economist at RBC Economics, who authored the report.

“Declining price trends are generalized but more advanced in parts of the country that experienced larger appreciation earlier in the pandemic. Toronto, the Fraser Valley and Vancouver have so far shown some of the sharpest drops. We see those trends continuing until demand-supply conditions tighten from current levels. We expect the cyclical bottom for prices to be reached around spring next year—though this is poised to vary market by market.”