Canadian home sales fall in March, price growth slows: CREA | Canada News Media
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Canadian home sales fall in March, price growth slows: CREA

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Homes on Sherman Brock Circle in Newmarket, Ont.Fred Lum/the Globe and Mail

Canadian home sales dropped in March and prices fell in some of the country’s hottest markets, as borrowing became more expensive after the Bank of Canada raised interest rates.

The number of resales decreased 5.4 per cent from February to March on a seasonally adjusted basis, with the sharpest drops in Calgary and the Toronto region, according to the Canadian Real Estate Association, or CREA.

“March definitely saw a slowdown compared to February in terms of both activity and price growth,” Jill Oudil, chair of CREA, said in a press release. Though Ms. Oudil cautioned that it was too early to say whether the country’s real estate rally was starting to end. “One month does not make a trend, so we’ll have to wait and see if this is the beginning of the long-awaited cooling off of this market,” she said.

The home price index, which tracks the price of a typical home and adjusts for pricing volatility, fell from February to March by low single-digit percentages in regions across southern Ontario such as Brantford, Cambridge, Kitchener-Waterloo and Hamilton-Burlington.

In other parts of the country where home prices have jumped by more than 50 per cent in two years, the home price index was up by a single percentage point, if at all. Overall, that contributed to the country’s slowest home price growth in six months.

Nationally, the home price index was up 1 per cent to $874,100 from February to March on a seasonally adjusted basis, according to CREA. That was down from the record 3.5-per-cent increase from January to February.

Compared with March of last year, however, the home price index is up 27.1 per cent. Over the same period, the number of home resales is down 16 per cent, while new listings have fallen 10 per cent.

Realtors say homes are taking longer to sell and that previous marketing tactics are no longer working. That includes underpricing properties and setting a date for offers in hopes of triggering a bidding war. Now realtors say that homes are not fetching as many bidders, and home sellers are not getting the prices they were expecting.

“A lot of these sellers have not come to terms with reality yet,” said Odeen Eccleston, president of real estate brokerage and developer Wiltshire Group in Toronto. “It looks like they’re not going to be getting the same numbers that their neighbours and counterparts obtained,” she said.

In the first two months of this year, houses in the Toronto suburbs were drawing dozens of bids with some selling for hundreds of thousands of dollars more than the asking price. Today, properties are not generating the same level of interest.

In York region, one of the suburbs where the typical home price has risen 70 per cent in two years , Ms. Eccleston said she has observed similar properties selling for $200,000 less than in February.

“It’s the same subdivision, same builder, same five-bedroom model and similar levels of upgrades,” said Ms. Eccleston, who has sold homes in the Toronto region for 15 years.

Activity is expected to wane further this year after the central bank raised its benchmark interest rate twice in two months. The bank has indicated it intends to continue to raise interest rates, which will continue to push up borrowing expenses for would-be buyers.

The cost of a fixed-rate mortgage, where the interest rate does not change over the term of the loan contract, has doubled in about a year, according to mortgage brokers, with the popular five-year fixed mortgage now above 4 per cent. Economists predict that the rise in interest rates will temper demand and lead to dip in prices.

“With the Bank of Canada set to hike rates aggressively, home sales are likely to trend even lower,” Rishi Sondhi, an economist with Toronto-Dominion Bank, said in a note, adding that this will “weigh on price growth.” Mr. Sondhi expects the average home price to fall incrementally in the latter half of the year.

Phil Soper, chief executive officer of Royal LePage, said there are signs that the real estate market is starting to calm down after nearly two years of frenetic bidding wars. Mr. Soper said multiple offer situations are dropping and the gap between the asking price and selling price is narrowing. “It’s getting easier to price properties,” he said.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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