The latest monthly housing market update from RBC Economics flags a “story to watch going forward”.
Hint: it’s about supply.
“Economic hardship is no doubt taking a toll on a number of current homeowners—including investors,” economist Robert Hogue wrote.
This could lead to distressed selling, which may contribute to lower home prices.
“Some of them could be running out of options once government support programs and mortgage payment deferrals end, and may be compelled to sell their property,” according to Hogue.
Hogue wrote in the update released Monday (June 15) that although market conditions remain generally balanced, there are “early signs demand and supply are decoupling”.
The economist noted that while supply and demand fell “in tandem in March and April, supply rose faster than demand in May”.
Last month, new Canada-wide listings increased 69 percent last month compared to April 2020.
While the market continues to favour sellers, this is “likely to change”.
“We expect the increase in supply to tip the scale in favour of buyers in many markets across Canada, some sooner than others,” according to Hogue.
“Vancouver and other BC markets, for example, could see buyers calling the shots as early as this summer,” the economist continued.
According to Hogue, benchmark prices are forecast to fall seven percent by the middle of 2021.
Those expecting a crash should not hold their breaths.
Hogue wrote that a “widespread collapse in property values is unlikely”.