The Canadian Real Estate Association (CREA) released its national home sales report for March 2018, announcing a 10.4% year-over-year drop in average sale price.
The national average sale price in March 2018 was slightly above $491,000. As usual, Vancouver and Toronto heavily impacted the average price. Remove these two areas from the equation and the average is just $383,000, which is a 2% year-over-year decline.
“Recent changes to mortgage regulations are fueling demand for lower priced homes while shrinking the pool of qualified buyers for higher-priced homes,” says Gregory Klump, CREA’s Chief Economist.
“Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb,” he adds. “As a result, ‘affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up homebuyers.”
Price growth slowed compared to last year, but there were still increases for apartment units (17.8%), townhomes (9.4%), and one-storey singles (1.3%). The only price growth to drop was for two-storey singles, which fell 2%.
The slowing price growth reflects trends in the Greater Golden Horseshoe (GGH). In Guelph, price growth increased 7.5% year-over-year, but in the Greater Toronto Area (GTA) and Oakville–Milton area, price growth dropped 1.5% and 7.1%, respectively.
“Government policy changes have made home buyers and sellers increasingly uncertain about the outlook for home prices,” says CREA President Andrew Peck. “The extent to which these changes have impacted housing market sentiment varies by region. A professional REALTOR® is your best source for information and guidance in negotiations to purchase or sell a home during these changing times.”
From February to March, there was a small 1.3% jump in national sales, but overall sales activity was down 22.7% compared to the record highs last year. March 2018’s sales activity was also 7% lower than the 10-year average. The first quarter of 2018 was the slowest first quarter since 2014.
New listings increased 3.3% from February to March, putting the national level of inventory at 5.3 months, which is in line with the long-term average of 5.2 months.
It’s important to remember that Canada’s housing markets differ significantly across the country. For example, there are only four months of new home inventory in the GTA, and based on recent sales trends and the strong demand, a healthier level would be 9-12 months of inventory.