Canada's Home Prices Still on The Floor, Says BMO
Canadian home prices fell again in February, influenced by severe weather and trade tensions with the U.S., according to BMO. The MLS benchmark price is down 15% from early 2022 and has remained stable over the past two years. While cities like Calgary and Montreal see record highs, Southern Ontario struggles with prices down over 20%. BMO cites three reasons for this: previous market overvaluation, population caps affecting demand, and trade-war impacts on the manufacturing sector.
Canadian home prices dipped again in February, a month rattled by harsh weather in Ontario and the confidence-sapping trade war with the United States, said Bank of Montreal (BMO).
The MLS benchmark price is still down 15% from its early 2022 high and has now gone just about sideways over the past 24 months, noted the bank.
Regional performance still varies, stated BMO. While markets like Calgary, Edmonton, Montreal and much of Atlantic Canada are seeing prices at record highs, those in Southern Ontario are still bouncing around cycle lows — down more than 20% in some cases, pointed out the bank.
According to BMO, three big reasons that Southern Ontario continues to languish are:
— There was arguably more froth built up during the boom than anywhere else in Canada, and as such the payback is
deepest/longest.
— Population caps are hitting, with Ontario a disproportionally high recipient of nonpermanent resident flows in recent years. As a consequence, rents are falling as supply comes to market as demand is softening.
— Trade-war concerns would hit hardest in the region, especially Southwestern Ontario where the manufacturing base is highly integrated with the U.S.
