MLS sales fall in January
OTTAWA – In what shouldn’t be surprising news, the Canadian Real Estate Association (CREA) has reported national home sales via its Multiple Listing Service (MLS) fell 3% on a month-over-month basis in January 2023. Actual transactions plummeted 37.1% below those made in January 2022 while the national average price also declined 18.3%.
The realtors’ group also noted the number of newly listed properties for sale rose 3.3% in January 2023 over December 2022.
Home sales recorded over the Canadian MLS in the first month of the year gave back all of the small gains made in December 2022, rejoining the mild downward trend observed since last summer. Gains in Hamilton-Burlington and Quebec City were more than offset by declines in Greater Vancouver, Victoria and elsewhere on Vancouver Island, Calgary, Edmonton, and Montreal.
The actual (not seasonally adjusted) number of transactions in January 2023 came in 37.1% below the second-best January ever in 2022 – indeed, the January 2023 sales figure was the lowest for that month since 2009.
“The big question on everyone’s minds after last year was what will housing markets do in 2023?” CREA chairperson Jill Oudil said in a statement. “We may have to wait another month or two to see what buyers are planning this year since new listings are currently trickling out at near-record low levels, but that should change as the weather warms.”
“Early 2023 feels a lot like 2019, where after a year in which it became much harder to qualify for a mortgage, everyone was wondering if the market would pick up in the spring,” CREA chief economist Shaun Cathcart added. “In 2019 the market started off slow, as there wasn’t much to buy. It took off once spring listings started to come out.
“With the Bank of Canada increasingly signaling that rates are now at the top, it’s possible the spring market this year could also surprise, particularly in areas where prices have been stable or are now stabilizing,” he continued, noting, “Buyers are likely feeling increasingly confident in taking on variable rate mortgages, and 2023 will probably be a good window of opportunity to be able to engage in a calmer home search and buying experience following the intense market conditions of the last few years.”
The association reported new listing remain historically low and new supply in January 2023 was at the lowest level recorded for the first month of the year since 2000. The sales-to-new listings ratio eased back to 50.7%, roughly where it had been over the entire second half of 2022. The long-term average for this measure is 55.1%.
There were 4.3 months of inventory on a national basis at the end of January 2023. This is close to where this measure was in the months leading up to the initial COVID-19 pandemic lockdowns, and still close to a month below its long-term average of about five months.
The actual (not seasonally adjusted) national average home price was $612,204 in January 2023, down 18.3% from the same month last year.
Excluding the Greater Vancouver and Greater Toronto areas – this country’s most active and expensive housing markets – from the calculation cuts almost $113,000 from the national average price.
“Markets had a lot to contend with last month, including the implementation of the foreign buying ban and the anti-flipping tax. In addition, the Bank of Canada hiked rates by a cumulative 75 bps (basis points) in December and January. As such, falling sales and prices last month are not much of a surprise,” Rishi Sondhi of TD Economics observed in her research note.
“Moving forward, housing activity could bottom sometime in the first half of this year, supported by a solid job market, robust population growth and the likelihood that yields grind lower,” she continued, noting new listings remain low and there are yet no signals that forced selling is pushing up supply. “The risk to the outlook is that regulators are looking to impose tighter lending standards on federally regulated financial institutions, a move that could weigh on housing demand.”
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