Canada’s housing market isn’t melting down as you’ve been led to think.

Housing markets are unique for their location, type, quality, and size, so a decline in the average housing price is different from a decline in the price of an average house, which sometimes makes it difficult to decide whether it’s the right time to buy or sell. Adding to the confusion is that some metrics suggest prices are falling and others show an increase, though, overall, housing sales are down significantly compared to the peak activity in February, while average prices are down to a lesser extent.

 Let’s have a look at the numbers in the Greater Toronto Area (GTA) as an example to clarify how markets are moving. Sales in the GTA were down to 5,627 units in August, a year-over-year decline of 34.2 percent, while the average house price rose by a tiny 0.9 percent, according to the Toronto Regional Real Estate Board (TRREB) data.

But TRREB’s quality-and size-adjusted Home Price Index (HPI) is a better indicator of price movements, because smaller and lower-priced homes might sell more frequently during slowdowns, which can lower the average price.

 Compared to August last year, the HPI was up 8.9 percent, which seems a lot different from the dismal-sounding newspaper headlines and economist forecasts. What gives? It appears a lot depends upon how the metrics are generated. For example, instead of comparing current sales and prices with those from the same period a year ago, you could make the peak housing sales activity in March 2022 the benchmark. Any comparison with March will exaggerate the declines.

 Sales in the GTA in August were down 48.3 percent from the peak sales observed in March, a much more significant decline than the 34.2 percent drop from August last year. Similarly, average prices in August, not adjusted for quality or size, were down 18 percent from the peak prices observed in February.

So, are housing prices declining or climbing then? The answer depends upon perspective. If, say, someone bought a house at the peak of the housing market in February and is trying to sell the same property today, they are likely to experience a noticeable loss. However, most homebuyers stay at the same place for longer than just a few months.

Even the significant decline in housing sales relative to the peak in February hides the fact that sales activity in lower-priced homes has picked up since then. The number of homes sold for less than $600,000 in the GTA has increased by almost 70 percent since February, while sales for homes sold for more than $1.5 million declined by 71 percent.

 Total sales volume in 2022 will clearly be considerably less than observed last year. Housing experts attribute the decline to the increase in the cost of borrowing resulting from the steep rise in mortgage rates. But what is ignored in such pronouncements is a phenomenon known as the “forward buy,” where consumers move up their purchases to benefit from something. Last year’s ultra-low mortgage rates were partly responsible for the extraordinary sales volume because many households likely advanced their home purchase from 2022 to 2021, thereby boosting sales.

Housing sales in the GTA jumped by 28 percent in 2021 from the year before, reaching an all-time high of 121,642. Overall, over 100,000 more sales were recorded in 2021 by the Multiple Listing Service in Canada than the long-term annual average. The decline in sales in 2022 is partly because some of this year’s sales were lost to last year.

 These more nuanced statistics should help us realize that Canada is not experiencing a meltdown in housing markets. The magnitude of sale and price movements is in the expected range. And since the average number of days a property is on the market increased to 22 in August from 8 in February, buyers in the GTA can now take their time deciding. The days of multiple offers and rapid sales are over, at least for now, which should be good news for homebuyers.