Canadian Real Estate Supply Surges, Banks See Lower Prices Ahead

• By David Buckingham
• Posted Monday, Oct 16, 2023 12:56 pm

Canadian Real Estate Supply Surges, Banks See Lower Prices Ahead

Canada is seeing higher interest rates, turning investors away from the market. That’s helping to balance demand. Canadian Real Estate Association (CREA) data reveals national existing home sales fell in September. The drop isn’t particularly noteworthy by itself, but when combined with strong inventory it demands attention. Market conditions are cooling so rapidly that Canada’s biggest banks are even adjusting expectations, and see lower prices ahead.  

Canadian Real Estate Sales Are Still Relatively Normal 

Canadian real estate sales are failing to meet expectations, but they aren’t exactly slow. Seasonally adjusted sales fell 1.9% in September, while unadjusted annual growth came in 1.9% higher. At just over 35k existing home sales, the month is roughly where pre-pandemic volumes were. Nothing like recent expectations, but still a long way from being a “slow” market. 

Canada Has Seen Inventory Rise To The High End of Normal

Inventory is where Canadian real estate gets interesting. Seasonally adjusted new listings climbed 6.3% in September, the sixth month the market has seen an increase. Unadjusted volumes show inventory 14.2% higher than the same month last year. That’s similar to the high-end of pre-pandemic norms, according to BMO senior economist Robert Kavcic. 

“Put another way, the unique period in early-2023 when there was a complete dearth of listings is now over, and we’re seeing much more...[READ MORE]