Feb 2011 11

Low Inventory Supports Canadian Housing Market

Posted by

According to the RE/MAX Housing Barometer Report which measured the Canadian housing market from January 2000 to December 2010, stable inventory levels turned the last decade into one of the most healthiest periods in the history of Canadian real estate. The Report measured the monthly ratios of sales to new listings in 18 major Canadian centres and found that mainly balanced and stronger seller’s conditions continued throughout the decade, which resulted in gradual increases in housing prices. The recessionary period from later 2008 to early 2009 proved to be an exception with a fall towards buyer’s territory, but less supply made up for the lower demand and provided high stability with low volatility.

Photo by Kirsty Andrews Photo by Kirsty Andrews

The average price gains for the decade moved between an annually compounded rate of return of 4.82 per cent to a 9.56 per cent high, with a national average at 6.82 per cent. Winnipeg was the tightest market where sellers dominated 85 per cent of the time. Elton Ash, Regional Vice president of RE/MAX of Western Canada said that inventory played a major role in the increase of prices, but also population growth, higher demand and a strong economy played a role. According to Ash, the recent recession didn’t hurt the housing market much, because prices kept rising slightly despite a decline in demand, because inventory remained tight. He anticipates that housing values will continue their climb, although a slower one than in 2010 thanks to fewer listings in the Canadian real estate market in 2011.

Traditionally, spring will keep the city centre housing markets busy. The upcoming months are expected to flourish with activity in the real estate sector and help to keep the market in a perfect equilibrium. In spite of these good news, some city centres, including Greater Vancouver are expected to have troubles with falling inventory and higher upward pressure on prices.

Michael Polzler, Executive Vice President of RE/MAX Ontario/Atlantic Canada said:

“Inventory has always been the wild card. Its influence is remarkable, but a number of other factors will serve to bolster Canadian real estate moving forward including land scarcity, intensification, immigration, continued infrastructure and capital spending, improving money markets and the rebounding economy. The threat of rising interest rates and the changes to mortgage lending may also prompt a flurry of activity affecting price growth in the weeks ahead. Yet, overall, gains in 2011 will be more moderate than those noted in the past decade.”

Leave a Reply

* required