RBC Economics says Canadian housing market has got “more fuel in the tank”
Some may think that the Canadian housing market is now running on fumes.
An RBC Economics report dispels this notion.
Following increases in resales and prices in 2020 and into 2021, the market has still a lot to give.
RBC economist Robert Hogue titled his report “Canada’s housing market run has more in the tank”, a dead giveaway to an obvious conclusion.
First, Hogue noted that the fall season “started on a high note”, with resales and prices marking month-over-month increases in September 2021.
This development represents a “deviation from the cooling trend that got under way this spring”.
Hogue stated that sales increased 0.9 percent in September compared to August, while new listings fell by 1.6 percent.
Meanwhile, the benchmark price of a Canadian home increased 1.7 percent last month compared to August, and 21.5 percent on a year-over-year basis.
“The uptick in resales last month is further evidence that a lot of pent-up demand—fuel in the market’s tank—remains out there,” Hogue wrote in his October 15, 2021 RBC Economics report.
The increase came “despite the distraction of a federal election and earlier signs of fatigue” on the part of homebuyers.
Moreover, supply and demand conditions “continue to heavily favour sellers, forcing buyers to stretch their purchasing budget further to win (highly competitive) bidding wars”.
“The national sales-to-new listings ratio got deeper in sellers’ market territory, rising from 0.73 in August to 0.75,” the RBC economist noted.
As of September, the benchmark price of a home stood at $750,400.
Hogue anticipates that it will “take longer” before prices start to moderate.
“We now expect prices to flatten in the second half of 2022 instead of the early part of the year,” Hogue wrote.