A 'for sale' sign is shown outside a home in Toronto last June. Adjusted for inflation, Ontario home prices have suffered some of the steepest declines since 2022.Cole Burston/The Globe and Mail
Canadian home prices slipped further in February, continuing a downturn that began in early 2022, according to resale numbers released this week by the Canadian Real Estate Association.
But as steep as the drop in the national benchmark price has been, the correction is even deeper when historical home prices are adjusted for inflation.
In real, or inflation-adjusted terms, the benchmark national home price has fallen by close to 30 per cent from its peak, bringing home prices back to the inflation-adjusted level of nine years ago.
“You have to go back to the bad 1990s cycle to find something similar,” Robert Kavcic, senior economist at Bank of Montreal, wrote in a note to clients.
“And, with inflation poised to pick up in the months ahead, while the market still languishes, we don’t expect this downward momentum in real home prices to turn around soon.”
Breaking national home prices down between apartments and single-family houses shows that the latter category has actually experienced a slightly steeper real decline from the peak, perhaps reflecting the euphoric price gains that unfolded for houses in smaller cities and suburbs in the run-up to 2022.
As is often said, there is no national housing market, and the differences that exist between some Canadian markets are even more extreme in real terms. Prices in Quebec in February, for instance, hit an all-time high.
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Meanwhile, in Alberta the inflation-adjusted benchmark price sat roughly where it was a decade earlier, having generally flatlined for most of that time. The typical home in Greater Vancouver has also endured a lost decade after accounting for the corrosive effect of inflation on prices.
Ontario home prices have suffered some of the steepest real declines from the 2022 peak, however, even if prices haven’t touched decade-ago lows, with the typical home in Greater Toronto shedding more than one-third of its value since the peak.
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