Canada’s housing market appears to be gaining momentum again, but a notable trend in recent weeks has been the lack of new listings becoming available, according to the Canadian Real Estate Association (CREA). In March, the number of newly listed properties on the market fell by 5.8%, bringing new supply to a 20-year low, while the sales-to-new-listings ratio reached its highest level in a year at 63.5%. This trend is occurring despite sales and prices inching upwards on a monthly basis.
Economists, such as MO’s chief economist, have observed the “absolute absence of selling” as a significant trend in Canada’s housing market in 2023. For instance, in Toronto, new listings were at their lowest level in the past 20 years, indicating that many people are reluctant to list their properties due to the soft market conditions, and there are fewer forced sales due to personal circumstances. Despite the significant increase in interest rates over the past year, there has not been an obvious increase in household stress leading to home sales.
The lack of supply has had an impact on home prices in Canada. While the national aggregate price of a home has decreased by 9.2% compared to the same time last year, prices have increased by 2.8% on a quarterly basis, and a year-over-year jump of 4.5% is forecasted by the end of 2023, according to CREA. It has also been reported a “chronic shortage” of supply for both rental and purchase markets, not only in major cities but also in secondary markets. Record levels of immigration are expected to further exacerbate the housing supply issue in Canada, with new home completions needing to rise significantly to keep up with the pace of new immigrants entering the country, as noted by economists at the British Columbia Real Estate Association (BCREA).