Calgary saw home sales in September fall by 14 per cent, while supply hit a five-year high.Jeff McIntosh/The Canadian Press
Three weeks have passed since the Bank of Canada’s rate cut, and there’s some evidence that those looking to buy are reacting to lower interest rates.
Housing markets typically heat up once borrowing costs drop, and if we see another rate cut at the end of October – which seems likely – home shoppers could be wondering whether market conditions have reached a sweet spot in terms of affordability.
The answer is complicated. Canada’s current housing market is inconsistent; sales are ticking up in some major urban markets but languishing in others. Ample inventory has generally kept a firm lid on price growth, preventing any urgency growing among buyers despite the strong negotiating position typically offered by a supply glut.
The main culprit is that housing costs and incomes remain largely unaligned – a challenge that’s yet to be alleviated by lagging price growth or possible future rate cuts.
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In a report released earlier this week, Robert Hogue, assistant chief economist at Royal Bank of Canada, said the recovery in home sales is “still uneven and fragile.”
Given the continuing economic uncertainty and the threats still posed by an evolving trade war, only those with sufficiently stable incomes and down payments should consider buying now.
Let’s take a look at the situation in three of Canada’s largest housing markets – and what buyers should keep in mind as they try to decide.
Toronto: Green shoots abound
Toronto’s housing market tends to respond quickly to rate cuts and the latest was no exception. While home sales remain historically low, they’ve been steadily rebounding over the summer months, and recorded an 8.5-per-cent year-over-year increase compared with September 2024, according to the Toronto Regional Real Estate Board (TRREB).
Buyer competition also firmed up slightly, as the increase in sales outpaced the 4-per-cent uptick in new listings. But while there are signs that supply is starting to dwindle, the city’s average price remains 4.7 per cent below last year’s levels at $1,059,377.
This lull presents a rare opportunity for Toronto-area buyers, says TRREB chief information officer Jason Mercer, who represents the country’s largest real estate board with 73,000 realtors and brokers. In the press release that accompanied the board’s September data, he wrote that two more quarter-percentage-point rate cuts from the Bank of Canada would effectively move mortgage payments in line with home buyers’ average incomes, “further spurring home sales and related economic activity.”
Vancouver: A slow stabilization
While Vancouver undisputedly remains Canada’s most expensive market, current conditions are leaning in favour of buyers: Inventory is now 20 per cent above the historical 10-year average, while home sales sit 20 per cent below it. Deals rose by a modest 1.2 per cent on an annual basis in September. Meanwhile, the benchmark home price reported by the Greater Vancouver Realtors (GVR) dipped by 3.2 per cent to $1,142,100.
And according to the sales-to-active listings ratio measured by the board, Vancouver prices are poised to fall further. The ratio, which measures the number of transactions compared with active listings in the market, currently sits at 11.3 per cent, below the 12-per-cent threshold that puts downward pressure on prices.
However, according to Andrew Lis, GVR director of economics and data analytics, there are signs home buyers are moving past recent challenges. He expects “market activity to continue stabilizing to the end of the year, barring any unforeseeable major disruptions,” he wrote in the board’s September release.
Calgary: Shifting from a sellers’ market to a balanced one
Calgary has been one of Canada’s hottest housing markets, with lower prices than in other cities and tight inventory that fuelled buyer competition. But that has started to unwind.
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According to the Calgary Real Estate Board (CREB), September home sales posted a 14-per-cent decline, while supply hit a five-year high. The total number of homes for sale rose 36 per cent on an annual basis, and 17 per cent above the long-term average for the month. As a result, the average price in the city fell 4 per cent from a year earlier to $572,800.
Supply levels have been rising in Calgary’s resale, new home and rental markets, while demand is slowing amid slower population growth and persistent uncertainty, Ann-Marie Lurie, CREB chief economist, said in the board’s release. “Ultimately, the additional supply choice is weighing on home prices.”
The takeaway for Calgary buyers? Take advantage of the increase in choice, before lower interest rates re-heat the market.
Penelope Graham is the head of content at Ratehub.ca.