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Home prices in Canada have fallen again this winter as interest rates continue to weigh on the country’s once-booming real estate market, economists say.
In a recent survey of 17 economists, 100% said house prices would continue to fall through the rest of this year and into the first quarter of 2023, according to the latest outlook from personal finance site Finder.
Economists are divided on the extent of the damage. A third, or 33%, of respondents expect prices to fall between 7.5% and 9.99% by the end of the year. A quarter believe Canada could see a decline of 2.5% to 4.99%. And at the higher end of the spectrum, 8% expect prices to fall 15-19.99%.
Aggressive interest rate hikes by the Bank of Canada helped calm the housing market. Rising mortgage rates give buyers pause and as a result house prices fall. In September, the average home price fell 6.6% from the same period last year, according to data from the Canadian Real Estate Association. For comparison, in February the average home price peaked at $816,720. By September, it was down to $640,479.
However, it’s not just buyers waiting on the sidelines that are helping to cool prices. Moshe Lander, an economics professor at Concordia University and a Finder panel member, said sellers are contributing to the slowdown.
“Rising interest rates have clearly had an impact on market demand and (this) is starting to show up on the supply side,” he said in the report.
High rates push mortgage payments up and some homeowners find themselves unable to cope. This could encourage some to sell their property as quickly as possible, driving prices down further in the process. Combine that with weaker buyer demand and we could see prices plunge between 5 and 7.9% over the next two months, Lander said.
Meanwhile, interest rates should continue to rise. Eighty-eight percent of economists polled by Finder expect another rate hike from the Bank of Canada in December.
The Finder’s panel of economists isn’t alone in calling for a continued slowdown in house prices. Royal Bank of Canada economists predict they will crater 15% by spring from their peak, with steeper declines of 16% in Ontario and British Columbia.
Bank of Montreal senior economist Robert Kavcic also predicts further declines.
“This downward price discovery is likely to persist into next year, and anyone waiting for better market conditions will need a bit of luck,” he wrote in an Oct. 14 note.
David Rosenberg and Alena Neiland of Rosenberg Research & Associates Inc. paint an even grimmer picture.
“Canada’s housing bubble has burst,” economists wrote in a recent Financial Post column.
“With further policy tightening in the pipeline…this housing pullback is just beginning,” they added.
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U.S. job openings unexpectedly rebounded in September amid low unemployment, likely fueling further wage increases and adding pressure on the Federal Reserve to extend its aggressive fight against inflation.
The number of vacancies rose to 10.7 million in September from a revised 10.3 million a month earlier, the Department’s Job Openings and Labor Turnover Survey showed on Tuesday. labor, or JOLTS. The median estimate from a Bloomberg survey of economists called for a drop to around 9.8 million.
The surprise upturn in job vacancies highlights a relentless demand for workers despite mounting economic headwinds. The lingering imbalance between labor supply and demand continues to support solid wage growth, adding to widespread price pressures and bolstering expectations of another big rate hike on Wednesday.
—Bloomberg
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FOMC interest rate announcement, followed by a press briefing from US Federal Reserve Chairman Jerome Powell
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NDP Leader Jagmeet Singh will talk about his priorities to help Canadians with the costs
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Standing Committee on Transport, Infrastructure and Communities Meets on Anticipated Labor Shortages in Canada’s Transportation Sector
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Standing Committee on Agriculture and Agri-Food Meets on Global Food Insecurity
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The Standing Committee on Finance meets regarding Bill C-241, An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons)
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The Standing Committee on Human Resources, Skills Development, Social Development and the Status of Persons with Disabilities meets regarding Bill C-22, An Act to reduce poverty and support the financial security of persons with disabilities through creation of the Canadian Disability Benefit and by making an amendment to the Income Tax Act
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The Senate National Finance Committee will hear Jean-Yves Duclos, Minister of Health; Ahmed Hussen, Minister of Housing, Diversity and Inclusion; and Diane Lebouthillier, Minister of National Revenue, on Bill C-31, An Act respecting cost-of-living relief measures relating to dental care and rental housing
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The 2022 Canadian Innovation Exchange Summit continues in Toronto
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The Ontario Public Service Employees Union will hold a press conference to discuss the hospital staffing crisis and the solutions that exist within Ontario’s public health care system that are being overlooked by the Ford government
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Real Estate Board of Greater Vancouver Releases October Home Sales Numbers
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Today’s data: ADP US National Employment Report
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Earnings: Suncor Energy Inc., Qualcomm Inc., CVS Health Corp., Nutrient Inc., Census Energy Inc., Sun Life Financial Inc., eBay Inc., Great-West Lifeco Inc., Marathon Oil Corp., Tourmaline Oil Corp., Brookfield Infrastructure Partners LP, CBS Corp., MGM Resorts International, Etsy Inc., Robinhood, Bausch + Lomb Corp., Mitsubishi Motors Corp., Spin Master Corp., Canada Goose Holdings Inc., Athabasca Oil Corp., Canaccord Genuity Group Inc. . ., Calfrac Well Services Ltd., Lucara Diamond Corp.
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Whole life insurance can be a controversial product, but its two main features, tax-sheltered growth and a tax-free death benefit, are worth considering when planning. estate or when you are looking for another tax shelter after maximizing your registered capital. retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). In the final FP Answers column, a certified financial planner answers a question from a reader, who asks if a whole life insurance policy is a good investment vehicle.
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Today’s Posthaste was written by Victoria Wells (@vwells80), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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