Correction in real estate market may be nearing its end, RBC says

Momentum is building in Canada’s resale real estate market pointing to the “correction” that started in 2022 coming to an end. That’s the thesis of a recent report by RBC Economics that found sales in January for the entire Canadian market increased nearly four per cent from December, marking the second consecutive month of sales growth.

The market saw about 478,000 sales last month, based on the annualized rate and seasonally adjusted. That’s still far below the annualized rate at the peak of market demand in March 2021 of about 764,000 sales, the report added.

What’s more, the recent rise in sales has yet to turn around the downtrend in pricing. Prices fell about one per cent month over month in January, and are down five per cent since August, RBC said.

Leading the decline nationally were Vancouver, Winnipeg, Toronto, Hamilton, Ottawa, Montreal and Halifax.

Calgary was among the few markets “bucking the trend” due to “exceptionally tight supply-demand conditions,” the report said.

Yet the lull in pricing nationally could come to an end soon, based on rising buyer demand and limited supply. RBC pointed to the sales-to-new-listings ratio in January at 59 per cent, indicating balanced market conditions. Yet the figure was just below the 60 per cent threshold, above which indicates market conditions favouring sellers — which would likely lead to rising prices.

What’s more, many underperforming markets since interest rates moved higher are now seeing high month-over-month sales growth, including Toronto up nearly 10 per cent and Vancouver up about seven per cent.

Calgary’s sales were up about five per cent, the report also said. Still, Toronto, Vancouver and most Canadian markets overall could be perceived as slow relative to historical levels. That, however, is not the case for Calgary and Edmonton, RBC noted. Both are seeing sales and price growth above longterm averages, the report added.