Flood Of New Listings Brings Housing Market Closer To Balance

A record-breaking number of Canadian homes were newly listed for sale in April, offsetting a near-record-breaking month of sales, bringing a once extremely seller friendly real estate market closer to balance.

“With the increase in new listings, the multiple bid scenarios that you’ve seen…in Toronto for example, that’s largely going to be a thing of the rear view mirror,” said Gregory Klump, chief economist for the Canadian Real Estate Association.

Klump said the market continues to edge toward balance between supply and demand after an extremely uneven period as Canada recovered from a global economic downturn.

The number of listings by owners who wanted to sell their house on the Multiple Listing Service rose by 99,901 in April, slightly surpassing the previous high for April set in 2008, the Canadian Real Estate Association reported Monday.

Meanwhile, the 52,042 units were sold in April, just falling short of the 2007 record, as home sales slid 2.6 per cent from March on a seasonally-adjusted basis and down 6.8 per cent from the peak recorded in December.

The sales came as prices in April were 12.2 per cent higher than a year ago, the smallest year-over-year gain since last summer.

Robert Hogue, senior economist at RBC Capital Markets, said the shift in the housing market is a welcome sign for Canada’s economy.

“We’re not at the point where the market power is shifting toward buyers, but when you’re getting into a more balance, what it means is the pace of price increases is going to moderate,” he said.

The market should remain hot throughout the spring as sellers and buyers in the country’s busiest markets— Ontario and B.C.— rush to beat paying the new harmonized sales tax comes into effect July 1, Hogue said.

He added that the market will further cool as banks move to raise mortgage rates later this year.

Economist Douglas Porter of BMO Capital Markets said a trend has been established and activity will only diminish further going forward, adding that by June sales may be no higher on a year-to-year basis.

“Canada’s housing market has gone from full gallop to stately canter and is poised to slow to a leisurely trot in the months ahead,” he said.

At the current sales clip, CREA says it would take 4.5 months to sell all the homes up for sale at the current rate, less than a year ago but more than the pre-recession levels.

House sales in April were 20 per cent higher than they were a year ago when the country was in the midst of a recession — a strong number but a slowdown from late last year when sales were 70 per cent higher than a year earlier.

A total of 236,397 residential properties were listed by the real estate agents in April, down 1.9 per cent from a year ago.