Optimism yet to translate into full market recovery
The recent rise in new listings in Canada suggests more optimism among Canadians about real estate, but a full-fledged recovery in the resale market has yet to occur, according to new report.
RBC Economics pointed to the second consecutive month of new listings rising countrywide, an indication of growing confidence in market conditions.
“We suspect some of them (the sellers) were among those who took a pass in the fall, and instead opted to get an early jump on the spring market,” the study said.
The higher listings' impact on activity was limited.
Sales only grew in February, month over month, in Montreal and Quebec City.
Still, the market seems to have stabilized, the report added, pointing to MLS home price index data. The benchmark price in February remained flat from January at $719,400 for a home in Canada, the first time since August that index did not decline month over month, RBC said.
Indeed, prices in most major cities were flat, including Calgary where the MLS index increased only 0.3 per cent in February from January. The only major city seeing a price decline was Ottawa, which fell 1.1 per cent month over month.
RBC added that the spring market should provide more clarity on whether a recovery is underway. That said, headwinds remain, including that many buyers and sellers are entering the busiest season of the year with “very different perspectives.”
Sellers are likely firmer on their listing price, understanding lack of supply exists amid relatively high demand, while buyers' purchasing power is more limited, so they have less ability to bid up on home prices.
That combination, the report concluded, could keep activity more “subdued” until expected interest rate cuts increase buyers' capacity to borrow.