Canadian house prices are down nearly 10% since April
National prices at $504,458 compared to $559,317 in April
We've known for awhile that Toronto home prices rapidly cooled in the past three months but now it appears to be a national retracement.
Data released today from the Canadian Real Estate Association showed prices slipping on slow sales. A runup in late 2016 and early 2017 has now been completely erased and national prices are up just 0.4% y/y through June.
What's also notable is that activity continues to slow. In June, activity was down 11.4% y/y.
In addition, last week's BOC rate hike will further squeeze buyers.
"The recent increase in interest rates could reinforce a lack of urgency to purchase or, alternatively, move some buyers off the sidelines before their pre-approved mortgage rate expires. In the meantime, some move-up buyers who previously purchased a home before first selling may become more motivated to reduce their asking price rather than carry two mortgages," said Gregory Klump, CREA's chief economist.
The question now is whether this is a pullback after an enormous run-up, or if it's a V-shaped top.
I tend to think it's a pullback but if the Canadian economy stumbles for some other reason, then it could get ugly quickly.