The Canadian housing market has become a story of two coasts. While the national market has undergone a significant correction since interest rates began rising in 2022, Eastern Canada is defying the trend and experiencing continued growth.
The Canadian Real Estate Association (CREA) reports that the national composite benchmark price for a typical home reached a peak of $855,800 in March 2022. Since then, prices have undergone a notable correction, settling at $729,700 as of March 2024. This represents a 32% increase compared to pre-pandemic levels, but a 14.8% decrease from the peak.
Eastern Canada: A Different Story
The picture in Eastern Canada is far brighter. Notably, Nova Scotia, New Brunswick, and Prince Edward Island (PEI) saw the strongest price surges after the initial rate cuts in 2020. These provinces witnessed significant increases of 71.7%, 70.3%, and 66.1% respectively, all peaking shortly after the first rate hike in 2022.
Even more surprising is the minimal price correction observed in these provinces since then. As of March 2024, New Brunswick boasts the highest growth rate at 69.4% since March 2020, followed by Nova Scotia (60.4%) and PEI (59.3%). This stands in stark contrast to pricier markets like Ontario and British Columbia, which experienced significant pullbacks (35.2% and 37.5% respectively) after peaking in 2022. Ontario is currently the only province with a double-digit correction.
Experts Ponder the Reasons
Experts are grappling with understanding this phenomenon. Traditionally, expensive markets on the West Coast have been more prone to frothy growth. Eastern Canada's resilience could be due to several factors, including:
- Relative Affordability: Compared to hotter markets, Eastern Canada offers relative affordability, potentially attracting buyers priced out elsewhere.
- Strong Local Economies: Certain areas in Eastern Canada might be experiencing robust economic growth, fueling housing demand.
- Limited Inventory: A lack of available listings in some Eastern Canadian markets could be putting upward pressure on prices.
Bubble or Sustainable Growth?
The long-term implications of this trend remain to be seen. The significant price increases in Eastern Canada, particularly in light of the national slowdown, raise concerns about a potential housing bubble. However, it's also possible that these markets represent sustainable growth fueled by strong local fundamentals.
Coldwell Banker Horizon Realty will continue to monitor the market closely and provide updates as they become available. As always, we recommend consulting with a local real estate professional for the most up-to-date insights on your specific area of interest.
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