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The trigger may have been an interest rate hike by the Bank of Canada on March 2, but more sellers entered the market in February, driving an increase in the number of newly listed homes across the country.
“A month is not a trend, but if there are any signs in February, more sellers may finally enter the Canadian real estate market,” Robert Hogue, senior economist at RBC, wrote in a new report on Monday.
This is most obvious in the Calgary market. It is estimated that the number of new homes listed in Calgary surged 69 per cent in February from a year earlier, setting the stage for record sales in February.
The house price is not cheap now. The MLS composite house price index in Calgary rose 5.9%, or $27000, between January and February. House prices rose 16.1% over the same period last year.
Toronto is by far the most expensive market in Canada, with its MLS house price index up 6.4% from January and up $80, 000 in a month. House prices in Toronto have risen by $354000, or 35.9%, since February 2021.
House prices in Vancouver rose 4.6% from January and 20.8% from a year earlier, or about $226000. But Hogue said it is estimated that since January, sales of second-hand homes have fallen 6%, while newly listed homes have increased by 12%, which may be a first step towards a more balanced market.
The economist said that the increase in the number of newly listed houses is important because sellers will play a central role in the formation of the real estate market in the spring.
If a large number of homeowners believe that now is a good time to sell their homes in order to ease supply shortages and rising prices ahead of more interest rate hikes and possible housing policies to cool the market.
If the number of sellers does not pick up sharply, house prices will continue to soar until interest rates rise enough to dampen demand.
“We expect to show further market and price trends in the coming months,” Hogue said.
On many levels, mitigation supplies are welcome. A recent international housing affordability report ranked Vancouver as the third most unaffordable market in the world after Hong Kong and Sydney.
The Demographia International Housing affordability report also noted that severely unaffordable housing has spread from Vancouver to smaller markets such as Chilliwack, Fraser Valley, Kelowna and Vancouver Island.