Canadian Sellers Opt to Wait for 2024
Recent developments in the Canadian real estate market have led to a noticeable trend: many sellers are choosing to delay listing their homes, with an eye towards 2024. This strategic decision comes in the wake of continued declines in home sales and new listings, as reported in November.
The Canadian Real Estate Association (CREA) has released data showing a 0.9% decrease in sales both month-over-month and year-over-year for November. This represents the smallest decline since July, yet it's part of a series of consistent drops observed throughout 2023. Concurrently, new listings experienced a 1.8% decline in November, following a 2.2% decrease in October. This marks a shift from the earlier parts of the year, where some markets saw an increase in listings.
Shaun Cathcart, CREA’s Senior Economist, notes that while many buyers had already retreated to the sidelines by August, a surprising number of sellers still entered the market in the fall. However, without receiving acceptable offers, these sellers are now largely choosing to wait until next year. This decision aligns with recent expectations of potential interest rate cuts, which could lead to a more dynamic spring market.
The national sales-to-new-listings ratio saw a slight increase to 49.8% in November, up from 49.4% in October. Despite this increase, the ratio remains below the long-term average of 55.1%. As for housing inventory, there was a slight uptick to 4.2 months by the end of November, still below the long-term average of around five months.
In the meantime, home prices have continued their downward trajectory. The Aggregate Composite MLS Home Price Index showed a 1.1% decrease from October to November. Price reductions, initially more pronounced in Ontario, are now being observed in regions like the Fraser Valley, Winnipeg, and Halifax. In contrast, provinces like Alberta, Saskatchewan, New Brunswick, Prince Edward Island, and Newfoundland are witnessing price increases.
Despite these changes, the national average home price in November stood at $646,134, a 2% increase compared to last year.
Looking forward, the market appears to be entering a period of stabilization in balanced territory, hinting at a potential "soft-landing" scenario. CREA Chair Larry Cerqua suggests that the coming months may not bring dramatic headlines from the resale housing market, but this stability is a positive sign for the overall health of the real estate market.
As sellers opt to "hunker down" and await more favorable conditions, the market is poised for a potential shift in 2024, with expectations of interest rate cuts and a return of motivated buyers. For now, patience seems to be the prevailing strategy among Canadian home sellers.
