Canada’s largest real estate markets have seen sales plummet, helping inventories. That was the message from RBC, who warns that existing home inventories in the country’s major markets are rapidly replenishing. In a note to investors, they explain that a flurry of new home completions and the start of the monetary easing cycle is motivating sellers. However, the same can’t be said for buyers who are taking a step back from the market, contributing to a price slowdown.
Canada’s Largest Real Estate Markets Are Seeing Inventory Rise
Major markets are seeing home sales weaken much faster than inventory. Home sales fell more than new listings in Toronto, Vancouver, Montreal, Calgary, and Fraser Valley. This has generally been the trend over the past year, helping to ease pressure on these markets.
“We suspect many sellers are timing their move ahead of interest rate cuts with expectations of a rebound in demand,” explained Rachel Battaglia, the RBC economist who authored the report.
She adds, “A rise in new condo completions in the Toronto area and struggling homeowners (including investors) are likely compelling more property owners to sell too.”
Canadian Real Estate Sales Plummet While Inventory Builds
Source: RBC.
New inventory remains resilient, but as the above data shows—this is a story of lackluster demand. The start of the easing cycle has motivated more sellers, but buyers have been taking a step back—likely waiting to see how this situation evolves.
Canadian Real Estate Prices Are Slowing As Sales Plummet
Source: RBC.
“We think most buyers will wait for steeper rate cuts before jumping into the market as the lagged impact of high interest rates keeps budgets under pressure,” notes Battaglia.
Less inventory pressure means less motivation for prices to rise, and that’s what’s happening. June’s annual price growth showed contractions in Fraser Valley (-3.2%), and Toronto (-4.6%). Low growth is also observed in Montreal (0%), and Vancouver (+0.5%). The only exception is markets in Alberta, with gains observed in both Calgary (+8.5%), and Edmonton (+7.0%).
“The influx of supply has shifted more of the bargaining power to buyers, who in some markets are still extracting price concessions from sellers,” she explains.
Further adding, “We suspect many sellers are timing their move ahead of interest rate cuts with expectations of a rebound in demand.”
