Some relief may be coming for home buyers in Canada.
RBC Economics notes that while residential property prices continue to rise, there are “signs of market rebalancing” on the horizon.
A major reason for this expectation is the notable increase in the number of homes for sale.
“Canadian homebuyers finally saw some positive action on the supply side last month,” Robert Hogue wrote in a March 16, 2022 report.
Hogue noted that new home listings across Canada grew by a “significant” 24 percent from January to February.
It’s a 23.7 percent month-over-month improvement to be exact.
Also, new home listings increased by a more modest 1.1 percent year-over-year from February 2021.
“This helped unlock some unmet demand in the market,” Hogue wrote.
This translated into home resales climbing 4.6 percent month-over-month in February 2022.
“But the rise in new listings did little to ease upward price pressure,” Hogue noted.
As a result, the home price index jumped 3.5 percent month-over-month, and 29.2 percent more compared to February 2021.
In a March 15 report, the Canadian Real Estate Association noted that the national average home price was a “record” $816,720 in February 2022.
That’s up 20.6 percent from the same month last year.
“To be sure, even more sellers will need to list their properties to rebalance Canada’s housing market,” Hogue wrote.
The RBC economist suggested that the easing of COVID-19 pandemic restrictions in February may have pulled some sellers into the market.
“Nonetheless, we see the arrival of more sellers on the market as a positive sign,” Hogue wrote in his report.
Plus, the Bank of Canada is expected to continue increasing interest rates, which will make mortgages more expensive.
“In time, we believe increasing borrowing costs will restrain homebuyer demand,” Hogue stated.
Overall, it’s good news for home buyers trying to get their feet into the Canadian housing market.
“This could mark a turning point toward more balanced demand-supply conditions later this year,” Hogue noted.