Home Buying, Real Estate News, Your Next Home
Just a few weeks ago, we pondered if Canada’s real estate correction would pause with an influx of cheap credit and government-led stimulus measures.
Canadian Real Estate Association (CREA) data released this morning confirmed it, with the benchmark home price rising significantly in March. Asset prices never move in a straight line, so it’s too early to tell if the correction is over. However, Canada is pulling out all of the stops to try and end it, and at least the small group of buyers on the market today believe it’s over.
Canadian Real Estate Prices Jump $12k Higher
Canadian real estate prices launched higher last month. A benchmark, or typical, home jumped 1.7% (+$12,300) to $727,700 in March. It follows a 1.0% increase (+$7,100) in February, making it the second monthly increase since the correction began. Two months doesn’t sound like much, but it’s enough to change the direction of the annual trend.
Canadian Home Prices See Annual Growth Reverse Course
Annual losses only pulled back slightly, but more important is the fact losses actually pulled back. Home prices were 15.5% (-$133,300) lower in March, decelerating by 0.3 points from the previous month. Still significant losses, but home prices returning to acceleration after just six months is definitely noteworthy. A significant change in buyer mindset has to appear to support that kind of sharp reversal.
The 12-month decline is the deepest correction in the history of CREA’s benchmark. The benchmark only goes back to 2005, so not a lot of insight in how this compares to the 90s correction. At the same time, the rate of this reversal might be the fastest as well.
Asset Prices Never Move In A Straight Line, So It’s Too Early To Call
It’s worth emphasizing once again that asset prices don’t move in a straight line. Moving in the opposite direction of any trend for just two months is called the “return to normal.”
In a bubble, it’s just the title of a phase. Exuberant buyers on the sideline will wait for things to slow down and jump in at any sign the bleeding has stopped. Once that cohort of buyers has cycled, the correction typically continues until more grounded ones appear.
Furthering that thought is the scarce level of home sales across Canada. There are not a whole lot of buyers, but those in the market are convinced prices should move higher.
A few months of deviation from a trend doesn’t necessarily mean it’s over. At the same time, every trend starts in just a few months that accumulate into a larger one. It won’t be clear what’s happening for a few months, but one thing is certain—sellers have very little motivation to sell with prices rising again. That can make inventory scarce for the next few months.
Market Intelligence, Real Estate News, Your Next Home
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