Posthaste: Canada's housing market faces biggest test since 1990s recession
Canada’s housing market is in “recessionary” territory, and it’s going to get worse before it gets better, economists warned this week.
Home sales that reached a peak of 64,000 in early 2021 are now down 45 per cent, said Canadian Imperial Bank of Canada’s housing market outlook. That’s 12 per cent below their pre-pandemic 10-year average.
The picture looks even bleaker when viewed by population with per capita sales at lows not seen since the 2008 recession.
“The housing market in Canada is in recessionary territory, as it faces its most significant test since the 1991 recession,” said CIBC economists Benjamin Tal and Katherine Judge.
“And activity will deteriorate further into the first half of 2024 as interest rates remain elevated, and supply floods the market.”
So far prices have not suffered as much as sales. The benchmark home price is down only 11 per cent from the 2022 peak and is still 38 per cent above pre-pandemic levels, said the report.
What has shielded prices is a lack of new listings in the market. From early 2022 to early 2023, new listings fell 31 per cent and fewer homes coming on the market helped to stem the decline in prices.
But that is changing, CIBC said. New listings have been climbing in recent months, rising 31 per cent from the low in March 2023.
“That surge in part reflects increased distress sales as owners list their properties due to financing issues as mortgages payments increase rapidly,” the economists said.
More listings and fewer sales has national housing headed for a buyers’ market — Toronto is already there, they said. But this is unlikely to draw buyers off the sidelines because elevated mortgage rates are keeping costs high.
“With listings on an upward trajectory, and demand
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