They're also likely to play an even larger market role soon, economist says
An influx of sellers is helping accelerate Canada’s housing market recovery, according to Robert Hogue, assistant chief economist at Royal Bank of Canada.
“Sellers are beginning to warm up to recovering housing markets,” Hogue said in a recent study. “Reports from local real estate boards unanimously show a material rise in new listings in May. This is good news for buyers who have been frustrated by historically low inventories.”
This was particularly apparent in Vancouver, which saw more sellers enter the market in May amid increasingly favourable conditions that have developed over the past few months.
“We estimate new listings jumped 15% m/m (seasonally adjusted) – the largest increase since January,” Hogue said. “These new buying opportunities generated further increases in resale transactions, extending the current upswing to four months.”
However, Hogue stressed that any extra supply will have only a minimal impact on inflamed supply-demand conditions, especially in the largest markets.
Hogue is anticipating sellers to play an even larger market role in the near future.
“It will take a further large influx of sellers in the coming months to bring markets into balance,” Hogue said. “For now, prices are rising. The pressure has in fact built up fast in some markets (like Toronto) where the rate of increase between April and May resembled the magnitudes of gains that were recorded earlier during the pandemic boom.”
At the same time, the market can hardly afford to downplay existing risks.
“We think higher prices will play their role as a stabilizer for the market: cooling demand and pulling in more supply,” Hogue said. “Our view is that mechanism as well as affordability issues will restrain further price appreciation. However, the current market strength clearly poses upside risks.”
