More home sellers got off the sidelines in May, slightly moderating supply issues as prices increased in Canada’s four largest markets..“Early reports from local real estate boards unanimously show a material rise in new listings in May,” says RBC economist, Robert Hogue..“This is good news for buyers who have been frustrated by historically low inventories. But in most cases, the rise in supply made only a small dent in tight demand-supply conditions. It will take a further large influx of sellers in the coming months to bring markets into balance.”.Pressure on prices has built up quickly, such as Toronto, where “the rate of increase between April and May resembled the magnitudes of gains that were recorded earlier during the pandemic boom,” says Hogue..“We think higher prices will play their role as a stabilizer for the market, cooling demand and pulling in more supply. Our view is that mechanism as well as affordability issues will restrain further price appreciation. However, the current market strength clearly poses upside risks.”.Here is Hogue’s overview of the big four..Calgary: New listings jump brings modest relief.Calgary’s story was largely a supply-side one in May, says Hogue..“We estimate new listings soared 27% month over month (m/m), which helped home resales rise more than 6%,” he says..“But the new listings increase came from decades-low levels, excluding the pandemic lockdown period, following sharp declines earlier this year. In the end it provided only modest relief to still extremely-tight demand-supply conditions. Property values continued to appreciate at a sustained pace with Calgary’s MLS Home Price Index (HPI) rising 1% m/m. This trend will likely be sustained in the near term.”.The Calgary market has the highest sales-to-new listings ratio (SNLR) in the country at 87% .Greater Vancouver Area: More sellers at last.Vancouver's increase in sellers in May came as more favourable conditions unfolded, says Hogue..“We estimate new listings jumped 15% m/m, the largest increase since January,” he says. “These new buying opportunities generated further increases in resale transactions, extending the current upswing to four months. Demand-supply conditions remain tight despite the increase in new listings, though.”.“Prices continued on their upward trajectory with Vancouver’s MLS HPI up for the fourth-straight month by 1.3% m/m. Our view is that extremely poor affordability will significantly limit the speed at which they will rise in the period ahead.”.Vancouver’s SNLR sales to new listing ratio is 65%..Greater Toronto Area: Boom time price advances.The 5.2% m/m jump in activity last month wasn’t as specular as the 25% bounce in April but it continued to underscore buyers’ growing desire to get back in the game, says Hogue. .“A sharp increase in sellers, new listings rose 17% m/m was the standout development,” he says. “No doubt it continued to unlock some of the pent-up demand that has built up over the past year.” .“While welcome, the rise fell well short of meeting demand, leaving the market tight and upward price pressure intense. The GTA’s HPI shot up for a second-straight month by a strong 3.2% m/m, a pace that rivals what was seen during the boom time earlier in the pandemic.” .“Even more sellers will be needed to boost inventories and rebalance the market. Otherwise, this price trajectory will persist in the coming months.”.Toronto’s SNLR is 68%.Montreal area: Getting hotter.The market turned a corner in May, says Hogue..“We estimate home resales surged 22% m/m, representing the biggest jump in more than two years and an end to a sharp year-long slide,” he says. “More homes were put up for sale but not quite enough to satisfy resurgent demand. This has turned up the heat by a few degrees and got prices to rise m/m for a fourth consecutive time.” .“With many buyers chasing the more affordable options, it was condo prices that increased the most in May with the median prices climbing 3.3% m/m, though single-detached homes also rose solidly, up 1.9%. We expect those trends to continue in the near term.”.Montreal’s SNLR is 64%.. GraphicGraphic
More home sellers got off the sidelines in May, slightly moderating supply issues as prices increased in Canada’s four largest markets..“Early reports from local real estate boards unanimously show a material rise in new listings in May,” says RBC economist, Robert Hogue..“This is good news for buyers who have been frustrated by historically low inventories. But in most cases, the rise in supply made only a small dent in tight demand-supply conditions. It will take a further large influx of sellers in the coming months to bring markets into balance.”.Pressure on prices has built up quickly, such as Toronto, where “the rate of increase between April and May resembled the magnitudes of gains that were recorded earlier during the pandemic boom,” says Hogue..“We think higher prices will play their role as a stabilizer for the market, cooling demand and pulling in more supply. Our view is that mechanism as well as affordability issues will restrain further price appreciation. However, the current market strength clearly poses upside risks.”.Here is Hogue’s overview of the big four..Calgary: New listings jump brings modest relief.Calgary’s story was largely a supply-side one in May, says Hogue..“We estimate new listings soared 27% month over month (m/m), which helped home resales rise more than 6%,” he says..“But the new listings increase came from decades-low levels, excluding the pandemic lockdown period, following sharp declines earlier this year. In the end it provided only modest relief to still extremely-tight demand-supply conditions. Property values continued to appreciate at a sustained pace with Calgary’s MLS Home Price Index (HPI) rising 1% m/m. This trend will likely be sustained in the near term.”.The Calgary market has the highest sales-to-new listings ratio (SNLR) in the country at 87% .Greater Vancouver Area: More sellers at last.Vancouver's increase in sellers in May came as more favourable conditions unfolded, says Hogue..“We estimate new listings jumped 15% m/m, the largest increase since January,” he says. “These new buying opportunities generated further increases in resale transactions, extending the current upswing to four months. Demand-supply conditions remain tight despite the increase in new listings, though.”.“Prices continued on their upward trajectory with Vancouver’s MLS HPI up for the fourth-straight month by 1.3% m/m. Our view is that extremely poor affordability will significantly limit the speed at which they will rise in the period ahead.”.Vancouver’s SNLR sales to new listing ratio is 65%..Greater Toronto Area: Boom time price advances.The 5.2% m/m jump in activity last month wasn’t as specular as the 25% bounce in April but it continued to underscore buyers’ growing desire to get back in the game, says Hogue. .“A sharp increase in sellers, new listings rose 17% m/m was the standout development,” he says. “No doubt it continued to unlock some of the pent-up demand that has built up over the past year.” .“While welcome, the rise fell well short of meeting demand, leaving the market tight and upward price pressure intense. The GTA’s HPI shot up for a second-straight month by a strong 3.2% m/m, a pace that rivals what was seen during the boom time earlier in the pandemic.” .“Even more sellers will be needed to boost inventories and rebalance the market. Otherwise, this price trajectory will persist in the coming months.”.Toronto’s SNLR is 68%.Montreal area: Getting hotter.The market turned a corner in May, says Hogue..“We estimate home resales surged 22% m/m, representing the biggest jump in more than two years and an end to a sharp year-long slide,” he says. “More homes were put up for sale but not quite enough to satisfy resurgent demand. This has turned up the heat by a few degrees and got prices to rise m/m for a fourth consecutive time.” .“With many buyers chasing the more affordable options, it was condo prices that increased the most in May with the median prices climbing 3.3% m/m, though single-detached homes also rose solidly, up 1.9%. We expect those trends to continue in the near term.”.Montreal’s SNLR is 64%.. GraphicGraphic
