With month-to-month new listing increases across several major real estate markets, it appears, at least for now, that the country's inventory issue is slowly improving. An analysis from RBC senior economist, Robert Hogue shows notable inventory increases last month, but he still refrained from calling it a trend just yet. With interest rates rising, home sales are expected to moderate, further boosting housing supply.
Several real estate markets are seeing buyers dwindle quicker than sellers. In Vancouver, growth for new listings was at 8.4% last month, while home sales fell 8.1%. In Toronto, new listings dropped by 6.6%, but home sales also fell by a staggering 16.8%. Comparable trends are seen both in Montreal and the Fraser Valley.
Real estate markets in Alberta saw something a little different. New listings in Calgary grew by 63.3% in February, as sales skyrocketed, increasing by 80.6%. Edmonton's new listings grew by 13.7%, while listings jumped 41.7%.
Annual % change, February 2022
Source: REBGV, FVREB, CREB, RAE, TRREB, QPAREB, RBC Economics
Real estate markets are seeing some much-needed relief from housing inventory shortages. The sales to new listings ratio (SNLR) is "balanced" as Robert Hogue explained. The SNLR is considered to be balanced and healthy when between 40% and 60% - last month, Vancouver's SNLR was at 61%, Toronto's at 66%. Demand is decreasing quicker than inventory and markets are closer and closer to being considered healthy.
"Sellers will play a central role in shaping up this year’s spring season. Should a critical mass of current homeowners see the coming months as an opportune window to list their property—now that interest rates are on the rise and ahead of potential policy actions targeting speculators—it would ease some of the supply restraints, both boosting near-term activity and reducing some of the pressure of prices. 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, explained Hogue."