The busiest home-buying season in Canada is upon us, with experts worried a lack of homes for sale will drive escalating prices even higher..Supply plummeted in the face of record-breaking sales last year, a trend brought forward by buyers in most markets in the country this year..“The question is, will supply be overwhelmed by demand as it was last spring, or will we start to see the re-emergence of some of the many would-be sellers who have been hunkered down for the last two years?” says Cliff Stevenson, chair of the Canadian Real Estate Association (CREA). .“The ideal situation would be that a huge surge of sellers comes forward looking to sell in the spring market,” says Shaun Cathcart, CREA’s senior economist..“If that were to occur, we’d likely see a massive number of sales which would get a lot of frustrated buyers into home ownership, and we’d likely see some cooling off of price growth if those offers are spread across more listings. It really comes down to how many properties come up for sale in the months ahead.”.A small uptick in listings has occurred, but hardly a turning point, says Robert Hogue, of RBC Economics, in a new report..“One month doesn’t make a trend, but if February is any indication, more sellers may be finally making their way into Canada’s housing market. Major market real estate boards showed month-to-month increases in new listings,” says Hogue. “This was especially the case in Calgary where a wave of properties put up for sale set the stage for a record-breaking month. .“The 3,300 transactions were the strongest tally ever for a February in Calgary. A surge in new listings, up an estimated 69% month-over-month, made this possible. It provided many buyers the options they had been seeking amid shrinking inventories.”.The options came at a cost..“Calgary’s composite MLS Home Price Index (HPI) soared 5.9% between January and February, pushing up the year-over-year rate of appreciation to a 15-year high of 16.1%. The wave of homes listed for sale helped temper the severe supply shortage but did not eliminate it,” says Hogue..“Calgary’s market is still very tight and upward price pressure remains intense. We expect further material appreciation in the near term, especially as a booming energy sector stokes buyer confidence.”.The Calgary Census Metropolitan Area is Canada’s third largest, behind the No.1 Greater Toronto Area and second place Metropolitan Vancouver..The Vancouver area took a step toward market balance, says Hogue..“Activity slowed despite more homes being offered for sale last month. Our estimated 6% drop in resales and 12% rise in new listings from January could represent a welcome first step toward more balanced supply-demand conditions in the Vancouver area,” he says..“We’re still a long way from prices stabilizing though. Still-solid demand and historically low inventories for now keep the heat on property values and will likely continue to do so in the near term. Vancouver’s composite MLS HPI last month rose an outsized 4.6% from January to $1.31 million. The gain over the past year is now an astounding $226,000, or 20.8%..Buyers clearly face an extremely challenging situation. Higher interest rates will make things even more difficult for many, further crushing affordability in the period ahead. We expect this will gradually suppress demand later this year and contribute to the market rebalancing.”.Activity was the most intense in the GTA..“Buyers dug still deeper into their purchasing budget to come out on top of bidding wars last month,” says Hogue..“Toronto’s composite HPI jumped a mind-blowing 6.4% from January, an increase of more than $80,000 in a single month. What’s more, it came on the heels of a series of material gains over the past several months. At $1.34 million, Toronto’s benchmark price is the priciest in Canada.” .Sellers will play a pivotal role in shaping up this year’s spring season, says Hogue..“Should a critical mass of current homeowners see the coming months as an opportune window to list their properties, now that interest rates are on the rise, it would ease some of the supply restraints, boosting near-term activity and reducing some of the pressure on prices,” he says..“If instead the number of sellers doesn’t pick up materially, recent price trends are likely to persist until interest rates increase sufficiently to curb demand. .“We expect the next few months to tell much about the future direction of the market and prices.”.Myke Thomas is a Western Standard contributor
The busiest home-buying season in Canada is upon us, with experts worried a lack of homes for sale will drive escalating prices even higher..Supply plummeted in the face of record-breaking sales last year, a trend brought forward by buyers in most markets in the country this year..“The question is, will supply be overwhelmed by demand as it was last spring, or will we start to see the re-emergence of some of the many would-be sellers who have been hunkered down for the last two years?” says Cliff Stevenson, chair of the Canadian Real Estate Association (CREA). .“The ideal situation would be that a huge surge of sellers comes forward looking to sell in the spring market,” says Shaun Cathcart, CREA’s senior economist..“If that were to occur, we’d likely see a massive number of sales which would get a lot of frustrated buyers into home ownership, and we’d likely see some cooling off of price growth if those offers are spread across more listings. It really comes down to how many properties come up for sale in the months ahead.”.A small uptick in listings has occurred, but hardly a turning point, says Robert Hogue, of RBC Economics, in a new report..“One month doesn’t make a trend, but if February is any indication, more sellers may be finally making their way into Canada’s housing market. Major market real estate boards showed month-to-month increases in new listings,” says Hogue. “This was especially the case in Calgary where a wave of properties put up for sale set the stage for a record-breaking month. .“The 3,300 transactions were the strongest tally ever for a February in Calgary. A surge in new listings, up an estimated 69% month-over-month, made this possible. It provided many buyers the options they had been seeking amid shrinking inventories.”.The options came at a cost..“Calgary’s composite MLS Home Price Index (HPI) soared 5.9% between January and February, pushing up the year-over-year rate of appreciation to a 15-year high of 16.1%. The wave of homes listed for sale helped temper the severe supply shortage but did not eliminate it,” says Hogue..“Calgary’s market is still very tight and upward price pressure remains intense. We expect further material appreciation in the near term, especially as a booming energy sector stokes buyer confidence.”.The Calgary Census Metropolitan Area is Canada’s third largest, behind the No.1 Greater Toronto Area and second place Metropolitan Vancouver..The Vancouver area took a step toward market balance, says Hogue..“Activity slowed despite more homes being offered for sale last month. Our estimated 6% drop in resales and 12% rise in new listings from January could represent a welcome first step toward more balanced supply-demand conditions in the Vancouver area,” he says..“We’re still a long way from prices stabilizing though. Still-solid demand and historically low inventories for now keep the heat on property values and will likely continue to do so in the near term. Vancouver’s composite MLS HPI last month rose an outsized 4.6% from January to $1.31 million. The gain over the past year is now an astounding $226,000, or 20.8%..Buyers clearly face an extremely challenging situation. Higher interest rates will make things even more difficult for many, further crushing affordability in the period ahead. We expect this will gradually suppress demand later this year and contribute to the market rebalancing.”.Activity was the most intense in the GTA..“Buyers dug still deeper into their purchasing budget to come out on top of bidding wars last month,” says Hogue..“Toronto’s composite HPI jumped a mind-blowing 6.4% from January, an increase of more than $80,000 in a single month. What’s more, it came on the heels of a series of material gains over the past several months. At $1.34 million, Toronto’s benchmark price is the priciest in Canada.” .Sellers will play a pivotal role in shaping up this year’s spring season, says Hogue..“Should a critical mass of current homeowners see the coming months as an opportune window to list their properties, now that interest rates are on the rise, it would ease some of the supply restraints, boosting near-term activity and reducing some of the pressure on prices,” he says..“If instead the number of sellers doesn’t pick up materially, recent price trends are likely to persist until interest rates increase sufficiently to curb demand. .“We expect the next few months to tell much about the future direction of the market and prices.”.Myke Thomas is a Western Standard contributor
