Canada's biggest bank believes the real estate craze may be nearing its end. RBC's chief economist Robert Hague believes the market to still be very strong. Yet, buyer demand is dropping far quicker than new inventory. In April, we saw a third successive month where buyers had gotten out of the market faster than the sellers.
Real estate markets still remain extremely busy, but the market has surpassed its boiling point, as sales have begun to decline.
The bank pointed out home sale, decreasing (from the previous month) for the first time in five months.
The seasonally adjusted annual rate (SAAR) regarding home sales dropped to 731,000 units in April, a fairly sizeable 12.5% cutback from the previous month. “Canada’s housing mania toned down a notch in April as home resales reversed their clearly unsustainable spike of the previous two months,” said Hogue.
RBC data indicates the SAAR for new listings hit 976,600 units for the month of April, just about 5% down from the previous month. The decline in new listings was far less considerable than the sales decline - leading to slight market pressure relief.
As mentioned above, Hogue still believes the market is tight, but the state of demand-supply is showing signs of improvement. He mentioned the SNLR (sales to new listings ratio) which fell to 75% in April - the third consecutive month the indicator had dropped.
As house prices continue to rise, the country's composite benchmark price jumped $17,000, a 2.4% increase from the month of March. Over the course of the past year, nationally, home prices rose by $135,000. Currently, home prices are rising faster than buyers are coming to market.
“It may be an early sign that some buyers are reaching their limit to engage in bidding wars,” he said. “Soaring property values have significantly raised the bar for those contests. Yet, for now, prices continue to escalate.”