Improving Inventory of Listings is Bringing Market into Balance

Improving inventory of listings is bringing market into balance

Canadians may soon be seeing the first signs of a shift in the resale market, bringing the current seller's market into more balanced territory.

According to statistics released by The Canadian Real Estate Association (CREA),  the number of homes sold through the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards edged lower in February. In recent months, national sales activity has slowed while new listings continue to rise, resulting in a more balanced national resale housing market.  Since a year will soon have elapsed following the recessionary decline and subsequent rebound for the Canadian resale market, year-over-year comparisons are expected to continue shrinking.

The average price of all homes in Canada sold through Boards' MLS® Systems in February 2010 was $335,655, up 18.2 per cent from just one year ago.  As with sales activity, this gain was smaller than in the past four months, and year-over-year gains are expected to become further subdued going forward.

CREA reports that the seasonally adjusted number of new listings on Boards' MLS® Systems across Canada climbed another 2.4 per cent on a month-over-month basis in February.  Listings reached 73,849 units, the highest level seen since October 2008.  Five consecutive monthly increases have lifted new listings 16.3 per cent above where they stood last September, when they had fallen to the lowest level since late 2005.  As with sales activity, new listings in February 2010 were up most in Ontario and down most in British Columbia.

Strong resale housing demand continues to draw down inventories, but supply is shrinking at a decreasing rate because of slightly softer sales activity and an increase in new listings in recent months. The number of months of inventory  (i.e. the number of months it would take to sell current inventories at the current rate of sales) in February 2010 stood at 5.2 months. This is still well below where it stood one year ago (8.8 months), but on par with February 2008.

According to CREA, national housing markets are becoming more balanced.  While there are still a number of major markets where negotiations favour the seller due to a shortage of inventory, the supply has begun rising.  If further  supply increases materialize as expected, this will continue to take the steam out of housing markets as the year progresses.

Of course, while these national trends are a good indication of where the market

is headed overall, real estate remains a global business that is transacted locally.  For more information on listing inventory in your local market, contact your local Coldwell Banker® real estate representative.