Although national data for Canada’s real estate market will not be available until later this month, early indicators point to an unpromising outlook. In January, demand showed a clear decline, according to economists at RBC, who confirmed that demand is falling faster than supply in most major markets, with only limited exceptions. This imbalance is putting pressure on home prices and increasing the likelihood that declines will continue in the near term.
Most major Canadian markets experienced noticeable sales weakness last month. While comprehensive data from the Canadian Real Estate Association (CREA) has not yet been released, current indicators show that existing home sales in the five largest markets fell compared with last year.
Rachel Battaglia, an economist at RBC, explained that supply and demand conditions deteriorated in January, with a sharp drop in demand in cities such as Vancouver and the Fraser Valley, and noticeable softness in Edmonton, Winnipeg, and Saskatoon.
There were only two exceptions regarding seasonally adjusted sales declines in Calgary and Regina. However, these markets did not record meaningful price improvements, as supply continued to outpace demand, maintaining downward pressure on prices across most parts of the country.
Toronto and Vancouver stood out as clear examples of these trends. Seasonally adjusted existing home sales in Toronto fell by 9.9% month over month, while Vancouver recorded a steeper 30% drop despite a slight increase in inventory.
These factors contributed to Toronto home prices declining for the twenty-second consecutive month, with the latest drop being the largest in three years. In Vancouver, prices edged down slightly amid ongoing affordability challenges and higher supply relative to demand, conditions that are expected to keep prices relatively subdued in the coming months.
RBC also noted that the continued rise in inventory, along with numerous residential construction projects currently underway, will likely prevent market dynamics from shifting in favor of sellers unless demand increases significantly. As a result, home price growth is expected to remain slow in the near term, with pressure on buyers persisting across most regions of the country.
