Canada’s housing market showed a mixed picture in May, with signs of increased activity appearing in some major cities after earlier slowdowns. While markets like Toronto and Calgary saw resale numbers rebound, others in British Columbia and Southern Ontario continued to face significant headwinds and price declines. This report breaks down the latest trends and what they mean for buyers and sellers across the country.
Contents
Key takeaways include:
- Sales activity picked up in several key markets like Toronto, Calgary, Ottawa, and others.
- Markets in Southern Ontario and parts of BC remain soft with prices under pressure.
- Resilient markets like Montreal and those in the Prairies and Atlantic region are holding up better.
- Inventory levels vary significantly by region, impacting price dynamics.
National Housing Trends Show Divergence
The overall narrative for the Canadian housing market in May is one of divergence. Following periods of significant slowdown driven by economic uncertainty, some markets are starting to see a pickup in resale activity. This was notably the case in Toronto, Ottawa, Calgary, Edmonton, Fraser Valley, Saskatoon, and Regina, where transaction numbers partially recovered from earlier declines.
Despite some positive movement, markets in Canada’s least affordable areas, particularly Southern Ontario and parts of British Columbia, remain notably soft. Activity in many of these regions is close to cyclical lows, suggesting a prolonged period before a robust rebound takes hold.
These softer markets are also where price declines are most evident. The MLS Home Price Index (HPI), a key measure of home price trends, fell in several areas from April to May, including the Toronto region, Hamilton, Kitchener-Waterloo, Cambridge, Vancouver, and Fraser Valley.
In contrast, other parts of the country are showing relative stability. Markets across the Prairies such as Edmonton, Saskatoon, and Regina, along with cities in Quebec like Quebec City and the Atlantic region such as St. John’s, have generally held up better, experiencing less volatility in activity.
Toronto Housing Market: Is a Turnaround Underway?
After facing significant slowdowns, Toronto’s housing market showed signs of stabilizing in May.
Existing home sales increased by 8.4% from April (seasonally adjusted), marking the second consecutive monthly rise. This rebound suggests that as economic uncertainty potentially eases, buyer confidence might be gradually returning, offering scope for recovery in the latter half of the year.
However, buyers currently hold a strong advantage. The number of homes listed for sale is at a multi-decade high, offering significant choice and negotiation power for those looking to purchase.
This ample supply continues to pressure prices. Toronto’s MLS Home Price Index (HPI) was down 4.5% compared to a year ago. While the index saw a marginal uptick in May from April, the supply-demand imbalance indicates prices are likely to continue facing downward pressure in the near term.
Montreal Housing Market: Resilient Despite Headwinds
The Montreal area market has demonstrated notable resilience, maintaining solid activity levels despite broader economic turbulence.
Despite a small dip in resale transactions between April and May (down 2% seasonally adjusted), the overall picture remains stable. The market has held up well, with sales near levels considered robust before recent economic shifts.
Inventory levels remain historically low, largely due to supply keeping pace with demand. This tight balance has tilted price pressure upwards.
While property values continue to rise – median prices for single-family homes were up 8.6% year-over-year, and condos 4.3% in May – an increase in sellers entering the market could gradually ease supply constraints and temper future price gains.
Vancouver Housing Market: Buyers Still Hold the Advantage
Vancouver’s market continues to favor buyers, with little urgency to purchase amid the current economic climate.
Home resales are estimated to have fallen for the sixth consecutive month between April and May, returning activity to lows seen in 2023. Buyers have increasing options as inventory reaches a 12-year high, partly due to more completed but unsold new condo units entering the market.
This growing supply and reduced competition among buyers is pushing sellers to accept lower offers to get deals done, driving down prices.
Vancouver’s MLS HPI in May was 2.9% below its level a year ago. This downward trend is expected to persist as long as supply outpaces demand and buyers remain in a strong negotiating position.
Calgary Housing Market: Strong Fundamentals Drive Activity
Calgary’s housing market saw a significant rebound in May, with estimated home resales increasing by over 8% from April, following three months of declines.
Market sentiment remains generally positive, with activity levels significantly above pre-pandemic norms. This strength is underpinned by powerful drivers: sustained population growth and a robust regional economy, where employment is growing at nearly three times the national rate.
Moderating prices are also playing a role in attracting buyers. Strong housing construction over the past year has increased supply, helping to rebalance the market.
This increased balance has reduced upward pressure on property values. The composite MLS HPI dropped below year-ago levels in May (-2.5%) for the first time since 2020. Further price moderation is anticipated as more new supply enters the market.
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What’s Next for the Canadian Housing Market?
May’s data paints a picture of a Canadian housing market that is diverging. While some cities like Toronto and Calgary show early signs of sales recovery, markets in Vancouver and Southern Ontario continue to face significant challenges marked by falling prices and ample supply.
For buyers, particularly in softer markets, conditions remain favorable with more choice and negotiating power. Sellers in resilient markets like Montreal still benefit from tighter conditions, although this may gradually shift.
Overall, the path forward remains uncertain, with continued regional differences expected. Market participants will be closely watching whether the recent uptick in activity in some areas represents a sustainable trend or a temporary blip.
