Canadian real estate markets have yet to see that expected boost from falling rates. Only a handful of markets have already reported September data, but RBC warns the trend continues to show new inventory outpacing sales. Rising inventory and sluggish sales are combining to fuel a downtrend.
Despite cheaper credit and lower prices, buyers still aren’t enticed to jump into the market. “Even with 75 basis points worth of interest rate cuts, we aren’t seeing buying activity pick up across the board just yet,” writes Rachel Battaglia, the author of the RBC report.
Adding, “Canada’s most expensive markets (Vancouver and Toronto) are still seeing modest fluctuations—keeping activity relatively stagnant since the spring. Easing supply-demand pressures are keeping prices in these markets on a downtrend too.”
Canadian Real Estate Sellers Outpace Buyers
Canada’s largest real estate markets have seen a significant uptick in sellers. Seasonally adjusted new listings significantly outpaced existing home sales in 4 out of the 6 major markets RBC tracks. Sales contracted while new listings continued growing in Vancouver, Fraser Valley, and Calgary. Toronto saw both grow from historically low levels, but new listings have outpaced sales in the region for the better part of the past year.
Only two exceptions to the trend were observed—Edmonton and Montreal. Both cities saw sales outpace new listings.
“The number of new listings increased across all major markets, except Montreal this September. The influx is continuing to build inventory—which is still hovering near the equivalent of four months of supply. Alongside weaker buying activity, the inventory accumu- lation is taking some of the steam out of most markets,” she explains.
Sellers Are Rising Much Faster Than Buyers, Boosting Inventory
Slower sales and rising inventory have been a national trend, with few exceptions. This allowed inventory to recover and build up much higher levels than the market saw during the peak of the low-rate frenzy. Annual growth of active listings was elevated in five out of the six major markets, with the largest jump in Calgary (+49.4%). It was followed by Fraser Valley (+37.1%), and Toronto (+35.5%), rounding out the top 3.
Edmonton (-11.6%) is the only exception, seeing a sharp decline in inventory. A big shift from a few months ago when the market was trailing the rest of the country’s big boom.
Battaglia notes, “[the] big boosts to inventory is keeping downward pressure on supply-demand conditions in most major cities.”
The bank sees demand picking up in the future, but it won’t be a straightforward process. Buyers are expected to jump into the market after a combination of lower prices and cheaper financing makes purchasing more attractive. Buyers have been resistant to jump into the market, pushing expectations of this year’s sales recovery into sometime next year.
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