Housing in Canada is getting cheaper
Since February, prices have fallen by 12%.
In February 2022, the average home price in Canada was $816,000 CAD. By April it had fallen to $746,000 CAD. High interest rates on mortgages are to blame.
Although prices have fallen markedly over the two months, the national average real estate price is 7.5% higher than last year's. According to a report from the Canadian Real Estate Association, New Brunswick saw the largest increase in average home values over the past 12 months, 24.8%. Housing in Nova Scotia went up 24.1 per cent and 20.4 per cent in Prince Edward Island. In Atlantic Canada, where homes were relatively cheap, prices held near previous levels only in Newfoundland and Labrador. Prices were almost unchanged in Saskatchewan — real estate went up only 1%.
In addition to the unpleasant feeling of being overpaid for a house, and the disappointment of a home purchased blindly, buyers are faced with another problem. The banks that issue mortgage loans value the property cheaper than the sellers. For example, a buyer chooses a house for $1.1 million CAD and expects to borrow $880,000 CAD, 80% of the amount. But if the bank values the house at $1 million CAD, the buyer will only receive an $800,000 CAD loan and will have to add $80,000 CAD to the down payment.
