After a spectacular two years, Canada's housingmarket has lost all momentum. MoodysAnalytics | realestate realestatenews realestatemarket housing
After a spectacular rise that saw frenzied real estate conditions for close to two years, Canada’s housing market has lost all momentum. A new
Total sales have plummeted most dramatically in Vancouver and Toronto, dropping by nearly two-fifths and nearly one-third in each region respectively between early 2021 and August 2022. Sales have decelerated less so in Montreal, the Prairie Provinces, and most of Atlantic Canada, with sales still above pre-pandemic levels in the latter two.
With that said, the ratio of permits to starts — with permits outpacing starts — implies that “permits are not being readily converted into starts, implying that crews are delaying or abandoning projects because of unfavorable economic outlooks or supply-side constraints,” notes the report, adding that “the climbing ratio may be more indicative of residual building-material bottlenecks.”
The pandemic saw demand and price growth for single-family homes expand dramatically, and the price appreciation was particularly strong in the suburbs and rural areas. “The causes are both structural and cyclical,” notes the report, pointing to both record-low interest rates and demographic trends, including millennial homebuyers and baby boomers opting not to downsize. This momentum didn’t falter until midway this year.
But with the end of the hike cycle presumably on the horizon, Moody’s report includes a forecast that the housing market will rebound in late 2024. It also notes that given the fact that home prices exploded during the pandemic, “the pullback is part of the economy’s normalization.”