Canada's Weakest Housing Markets Now Include Toronto, Vancouver

Canada’s housing markets are becoming a story of east versus west, with solid sales and rising prices in Ontario and points east, and the exact opposite in the western provinces.

Nationwide home sales stayed steady in June, the Canadian Real Estate Association reported on Monday, declining a miniscule 0.2 per cent from May. The benchmark house price for all markets rose 0.3 per cent in the month, to $616,600. That’s still about 1 per cent lower than its peak at the end of last year.

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“The big story here is that sales and prices are essentially flat on a national basis, the market is close to overall balance, and sales activity is almost right on top of its 10-year average,” Bank of Montreal chief economist Doug Porter wrote in a client note. 

“In other words, the Canadian housing market is now actually kind of boring, which is likely exactly what policymakers would like to see.”

But dig down into the regional markets, and the story is not quite as boring. All of Western Canada’s major housing markets are experiencing sales and price declines, while Ottawa, Montreal and Halifax are seeing unusually strong growth.

“While sales activity in Canada’s three westernmost provinces appears to have stopped deteriorating, it will be some time before supply and demand there becomes better balanced and the outlook for home prices improves,” CREA chief economist Gregory Klump said in a statement.

One common way to measure how strong a housing market is, and where it’s headed next, is to look at the sales-to-new listings ratio. It’s the total number of home sales, as a percentage of the newly listed homes available on the market. The higher the percentage, the stronger the demand and therefore the likelier prices will be going up.

Looked at this way, Canada’s strongest and most promising housing markets sure aren’t what they used to be. Both Toronto and Vancouver are in the bottom 10, while Ottawa, Halifax and Montreal dominate the list of strongest markets.