The Greatest Housing Bubbles in Canada, January Update: Prices Plunge, Housing Bust Gets Real

Who panics first, panics best? Some of the charts are a bit weird.

By wolf richter for wolf street,

House prices in Canada fell 1.2% in November to December, the ninth month-over-month decline, and are now down 17.4% from the peak in March 2022, and down 7.5% from a year earlier. Canada MLS Home Price Index by the Canadian Real Estate Association (CREA). Year-on-year sales declined by 39%.

From the start of the Bank of Canada’s money-printing binge in March 2020 to the start of the rate-hike cycle in March 2022, the overall benchmark had increased in value by 54%. This spectacular housing bubble, on top of the existing housing bubble, was created entirely by central bank money-printing and interest rate suppression. It was a global phenomenon, which triggered massive global inflation. So now comes the challan of the party which printed money under the influence of alcohol.

The Canada MLS Home Price Index’s overall benchmark price for all types of homes has now fallen from C$151,300 to C$717,000 in nine months.

The 17.4% decline in the benchmark price from the peak in March was the largest and fastest nine-month decline ever recorded in CREA’s data going back to 2005. In Canada, there wasn’t much of a housing bust during the financial crisis, but now the housing bust is here, and it’s real, and it’s not seasonal or anything. Homes are being reevaluated on a large scale:

Greater Toronto Area: The MLS Home Price Index Composite benchmark price fell 0.8% to C$1.08 million for the month:

  • From peak in March 2022: -19.0%
  • Year-to-date: -8.9%
  • Decline in 9 months from peak in March 2022: -C$253,600
  • Jump in 9 months to peak in March 2022: C$313,000

Greater Vancouver: The MLS Home Price Index Composite benchmark price fell 1.5% for the month to $1.11 million:

  • From peak in April 2022: -11.9%
  • Year-to-date: -3.3%
  • Decline in 8 months from peak in April 2022: -C$150,400
  • Jump to peak in April 2022 in 8 months: +C$163,300

Hamilton-Burlington Metro: Prices have moved even more spectacularly than those in Toronto during the pandemic: from the start of the Bank of Canada’s money-printing binge in March 2020 to the price peak in February 2022, the overall benchmark price increased by 70%. Now they are going downhill even faster and more spectacularly.

The MLS Home Price Index composite benchmark price fell a further 3.3% to C$803,200 for the month, its lowest since February 2021:

  • From peak in February 2022: -24.9%
  • Year-to-date: -14.8%
  • Decline in 10 months from peak in Feb 2022: -C$265,600 – rapidly going down from top.
  • Jump in 10 months to peak in February 2022: +C$244,400

Charts like this are kind of funny:

Victoria: The overall benchmark price fell a further 2.4% for the month to C$872,700:

  • From peak in June 2022: -11.4%
  • Year-to-date: +2.3%
  • Decline in 6 months from peak in June 2022: -C$112,800
  • Jump in 6 months to peak in June 2022: +C$132,200

Ottawa: The overall benchmark price fell 2.0% to C$610,800 for the month:

  • From peak in March 2022: -16.1%
  • Year-to-date: -4.6%
  • Downside in 9 months from peak in March 2022: -C$117,400 – going down much faster than up
  • Peak in 9 months in March 2022: +C$85,500.

Calgary: Despite the boom in oil, domestic prices are now falling in Canada’s oil capital. The overall benchmark price fell 0.6% for the month, the seventh month in a row of decline, at C$506,400:

  • From peak in May 2022: -4.8%
  • Year-to-date: +8.1%
  • Decline in 7 months from peak in May 2022: -C$25,800
  • To peak in 7 months in May 2022: +C$67,200:

Montreal: The overall benchmark price fell 0.6% to C$497,800 for the month:

  • From peak in May 2022: -10.4%
  • Year-to-date: -0.7%
  • Decline in 7 months from peak in May 2022: -C$57,800
  • To peak in 7 months in May 2022: +C$64,600:

Halifax-Dartmouth: After years of housing sanctity, the money-printing bug turned buyers’ brains to a pulp. The benchmark price increased by 81% from February 2020 to peak in May 2022.

The Composite benchmark price rose to C$480,600 in December (+0.2%) after heavy losses in the previous months:

  • From peak in May: -12.3%
  • Year-to-date: +6.3%
  • Decline in 7 months since peak in May: -C$67,200
  • Jumped in 7 months to peak in May: +C$105,200:

Quebec City: The overall benchmark price fell 0.6% to C$468,100 for the month:

  • From peak in May: -10.0%
  • Year-to-date: -0.3%
  • Decline in 7 months since peak in May: -C$52,200
  • Jumped in 7 months to peak in May: +C$59,400:

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