A new report from RBC Economics has found that Canada's housing market began the year with a notable downturn, characterized by a sharp drop in sales and a concurrent rise in supply across major markets. The analysis highlights that despite increased choice and more favorable pricing for potential buyers, demand plummeted in several regions during January.
Market Performance Across Major Cities
Vancouver experienced one of the steepest declines, with sales falling by more than 28 percent year over year. Listings in Vancouver also decreased by approximately seven percent, indicating a contraction in new supply. In contrast, Edmonton, which had been a hotspot for resale activity, saw sales drop by almost 28 percent, while new listings grew by nearly five percent, contributing to a significant inventory increase of about 33 percent by month's end.
Calgary's Mixed Trends
Calgary presented a more nuanced picture, with sales declining by almost 15 percent year over year but increasing by over seven percent from December. New listings in the city fell by four percent, yet inventory surged by almost 21 percent, the second-highest percentage jump among major markets. This combination of higher supply and reduced demand led to a nearly five percent decrease in Calgary's price index compared to the previous year.
Price Index Changes and Buyer Conditions
Price indices reflected the broader market cooling, with Toronto leading major centers with an eight percent year-over-year drop, accompanied by a 19 percent decline in sales. Vancouver's price index fell by nearly six percent, while Edmonton's saw a modest one percent gain. RBC noted that conditions in Canada's two largest markets, Vancouver and Toronto, now favor buyers, with Vancouver's sales-to-new-listing ratio at 27 percent, well below the 40 percent threshold for a balanced market.
Balanced Markets and Outlook
The report identified Calgary, Edmonton, and Montreal as remaining balanced markets, suggesting more stable conditions compared to the buyer-favorable environments in Vancouver and Toronto. Overall, the findings underscore a shift towards increased supply and reduced demand, potentially offering more opportunities for homebuyers but signaling challenges for sellers in the early part of the year.
