March 28, 2023

Posthaste: Could the worst be over for Canada’s biggest housing market?


Good morning!

Regional real estate reports released last week showed that Canada’s housing market continues to decline under the weight of rising interest rates.

No surprise there. The Bank of Canada has raised interest rates by three and a half percentage points since March, thoroughly throttling the country’s overheated housing market. And more hikes to come.

In most markets, sales are now well below pre-pandemic levels, and prices continue to fall. Still, RBC economist Robert Hogue noted “interesting nuances” in some of last week’s reports.

In Toronto, Canada’s largest housing market, there are signs that the sharp decline of recent months may be stabilizing, Hogue wrote in a recent note.

Seasonally adjusted sales remained almost unchanged in September-October. And while rising prices have cooled demand, there’s no sign they’re heating up supply, he said.

“So far, there are no signs that higher prices are causing distressed selling,” said Hogue.

The decline in prices has also slowed down. Hogue said the composite MLS home price index fell for the seventh straight month in October from the previous month. But the 1.1 percent drop is less than a third of the April-August average drop of 3.4 percent.

Torontonians may take solace in this. Since that market peaked in March, prices are now down 18 percent, or $237,000, wiping out nearly half of the pandemic’s gains.

Meanwhile, in Montreal, “the recession is not letting up,” said Hogue. More and more buyers stay out of the market, inventories grow and prices continue to head south. RBC estimates that sales in October fell 2.6 percent from the previous month, but that’s also less than the average of 7 percent over the previous three months.

Calgary is one of the few markets in Canada that has remained well above pre-pandemic levels. RBC estimates that sales here grew nearly 5 percent month-on-month in October. Prices have fallen, but the 4.2 percent drop from May’s peak is a fraction of the correction seen in other markets.

Price declines appear to be slowing across Canada, Hogue said. Regardless, “whether activity is stabilizing, leveling off soon, or falling further, our view is that the market will remain generally soft in the coming months.”

RBC doesn’t expect Canadian housing to bottom out until next spring, when the national benchmark price has fallen 14 percent (quarterly) from peak to trough.


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This is what Douglas Porter, chief economist at BMO, calls “the nasty side effect of inflation.”

On Monday, striking education workers in Ontario agreed to return to work only after the provincial government offered to repeal a controversial law banning strikes. That same day, GO Transit workers walked off the job, shutting down regional bus service across the Greater Golden Horseshoe River and leaving commuters scrambling.

It seems no coincidence that when inflation rises, labor strikes are not far behind. In the past 70 years, the only serious labor unrest in Canada was from the mid-1970s to the mid-1980s, Porter wrote in a note on the BMO chart above. It was also the last serious period of high inflation – until now.

Strikes tend to lag inflation by about six months, Porter said, and in the mid-1980s labor unrest continued for several years after the onset of inflation. The economist said it was probably partly closed, but there was also debate about whether high inflation had really disappeared.

  • US midterm elections

  • Environment and Climate Change Minister Steven Guilbeault holds a press conference in Sharm-El-Sheikh, Egypt to discuss his participation in the UN Climate Change Conference (COP27)

  • Parliament’s budget chief is releasing a new report titled “Global Greenhouse Gas Emissions and Canada’s GDP,” which examines the long-term effects of changing weather patterns caused by climate change on the Canadian economy.

  • The Energy Transition Center in downtown Calgary opens for business. The center supports research and development of new energy technologies and accelerates the commercialization of promising innovations by supporting new start-ups

  • Francois-Philippe Champagne, Minister of Innovation, Science and Industry; Randy Boissonnault; Minister of Tourism and Deputy Minister of Finance; and Pete Guthrie, Alberta’s Minister of Energy, in Edmonton to announce strengthening Canada’s economy for a low-carbon future and talk about how the Canadian government is contributing to reducing emissions

  • Public Services and Procurement Minister Helena Jaczek announces the investment in the Canadian Aviation and Aeronautics Council.

  • Alberta’s rural municipalities are hosting their 2022 fall meeting.

  • Today’s information: NFIB US Small Business Economic Trends Survey

  • Revenue: Dye & Durham, Intact Financial, TransAlta, Maple Leaf Foods, Lundin Gold, Walt Disney, Boardwalk REIT, Ovintiv, News Corp.



Snowbirds looking to escape the Canadian winter may be in for sticker shock as inflation rises and the Canadian dollar depreciates against the US currency.

If you’re heading south this winter, you’ll need to prepare for a more expensive stay, and our content partner MoneyWise has these strategies for saving on travel, accommodation and living expenses.


Today’s Posthasten is written by Pamela Heaven, @pamheavenand additional reports include The Canadian Press, Thomson Reuters and Bloomberg.

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