For homebuyers and homeowners alike, all eyes have been on the housing market in recent months waiting to see where house prices are eventually headed.
With house prices already cooling on average across the country, particularly in and around the Greater Toronto Area, some are speculating that the chill in the market could continue well into the second half of the year.
Signs of a Prolonged Housing Slump?
The Canadian Real Estate Association reported thatthe average sale price in April declined by 11.3 per cent from its peak a year earlier to $495,000, while home sales were 13.9 per cent.
BMO Chief Economist Doug Porter noted that sales are now down 21.7 per cent in adjusted terms from the record high in December, just before the new mortgage stress test came into effect.
The lower home sales have resulted in a drop in listings, a sign that sellers are waiting for prices to pick up again before selling, according to Porter.
“Notably, the sag in April sales was accompanied by an even bigger pullback in new listings, in a sign that potential sellers are unimpressed with the prices on offer,” he wrote in a recent note.
Meanwhile, during its second-quarter earnings reporting, CIBC says it expects a drop in mortgage originations in the second half of the year due to the mortgage stress test that came into effect January 1.
“We expect there to be an origination decline in the 50 per cent range relative to the same period last year,” Canadian retail banking head Christina Kramer said in a statement.