Canadian Real Estate Experiencing The Worst Declines Since The Last Recession

Canadian real estate has been on the rise for the past few years, but as of 2018, that statement can no longer be deemed correct. Sales among Canadian real estate have dramatically slowed, with a notable drop of 11%. According to the Canadian Real Estate Association, this drop is larger than any we’ve seen for 10 years. There hasn’t been a drop this significant since 2008. So why should you care, you may ask?

It’s more than common to hear a realtor mention that there isn’t a national real estate market, but according to the Canadian Real Estate Association, that is very incorrect. The spin-off economic activity that is generated after every sale, has observably been $64,000. This is very significant, and shouldn’t be taken lightly. The CREA also states that roughly every 3 home sales enables one job to be created, activity wise.

When discussing spin-off activity, it’s important to note that it involves quite a few entities. Examples being renovation and moving costs, financial and legal services. As well as various household purchases.

Now, you may be curious as to how this can be deemed national? Well, to put it simply, credit liquidity is known as a national thing, and the various corporate entities that issue mortgages are national as well. When home sales rise, the economy is benefited. When the opposite happens, namely this significant drop, spin-off activity shrinks, and credit is drastically tightened.

In 2018, the amount of real estate sales in Canada took a dive, of 11% from the sales of 2017. The CREA reports that in 2018, 458442 sales were made. Frankly, it is important to note that these numbers may change, but as these are the preliminary numbers reported by the CREA.

The various declines over the past few years have been getting steeper and steeper, with 2017 sales obtaining a notable drop of 4.7% from 2016. This is signal to a trend in which Canadian real estate sales will continue to drop, at a drastic rate. The last time a trend this significant was blatantly obvious was during the last recession.  

Now, with unfortunate statistics comes unfortunate consequences. The Canadian economy took a large hit to its spin-off activity, of nearly $3.66 billion, and approximately 19,000 possible jobs were lost.

The near future of the real estate market isn’t look very bright, and with this trend of harsh decline among yearly sales, it’s fairly clear that 2019 won’t be much brighter.