Canadian condo apartments are sliding after dodging much of the housing correction. Canadian Real Estate Association (CREA) data shows benchmark condo prices fell for a fourth straight month in July, marking the start of a second wave of losses.
Canadian Condo Apartment Prices Fall To A 4-Year Low
Canadian benchmark condo: The price of a typical condo apartment across Canada in Canadian dollars.
Source: CREA; Better Dwelling.
Canadian real estate prices have generally moved lower, and apartments were no exception. The price of a typical apartment fell 0.8% (-$4,000) to $490,600 in July, now down 5.4% (-$28,000) from last year. The price of a condo apartment is now the lowest since June 2021—just a touch over 4 years ago.
The annual rate of decline is signaling more bearish news is on the way. The 5.4% year-over-year (y/y) drop in July follows a fifth consecutive month of accelerating annual declines, and marked the 15th month in negative territory. This has already reversed gains seen during the early 2023-2024 recovery, and it has enough momentum to wipe out further gains.
The 3-month annualized rate of decline was also down 8.2% in July, suggesting more downward pressure remains. Until this climbs above the 12-month trend, the odds are slanted towards the bears in the near term.
Doubling Down? Canadian Condo Prices Enter Sharper Second Wave Correction
Canadian benchmark condo: The percentage change from the record high reported in April 2022.
Source: CREA; Better Dwelling.
Since hitting an all-time high of $570,900 in April 2022, prices dropped 14.1% (-$80,300) as of last month. Not a crash, but the distance from the peak is plunging lower much more aggressively than the first stage of the correction that kicked off in 2022.
Despite industry claims of general market “stabilization,” there’s a lot more nuance here. Yes, composite home sales are on the rise but they have yet to recover pre-pandemic levels. Those sales look even worse if population growth is considered.
The lack of apartment affordability further complicates the whole market. While prices have fallen a significant amount from the record high, they remain deeply unaffordable. Only 1 in 5 households earn enough to purchase a benchmark apartment—not in pricey cities like Toronto or Vancouver—but across the country.
The top 20% of households are typically in their later earning years, and are unlikely to be purchasing a starter home. That creates a bigger issue for the market—if few can get on the ladder, who’s going to climb it to sustain demand?