Inventory levels in Canada’s major real estate markets have been declining over the past decade, and active listings in July fell below the 10-year average across the country.
In its recently released 2022 Housing Inventory Report, RE/MAX Canada examined active listings in July from 2013 to 2022 in eight major markets, including Greater Vancouver, the Greater Toronto Area, Calgary, and Montreal.
The report, which also studied Winnipeg, Hamilton-Burlington, Ottawa, and Halifax-Dartmouth, found that inventory levels fell short of the 10-year average in all but one of the markets in July 2022.
Double-digit declines were seen in six markets, including Montreal (40.16%), Calgary (26.1%), and Greater Vancouver (16.1%). Halifax-Dartmouth saw the largest drop, at 65.5%.
The housing inventory shortage was “less-pronounced” in the GTA, with supply falling just 6.8% from the 10-year average. Hamilton-Burlington was the only market to forgo the trend, with supply rising 3.2% above the 10-year average.
RE/MAX noted that several markets, including the GTA and Greater Vancouver, experienced more active July listings between 2003 and 2012 than in the following decade.
The “robust” supply in the early 2000s made for healthy sales and annual price appreciation, and created an anchor for the housing market during the Great Recession, said Christopher Alexander, President of RE/MAX Canada.
“Population growth and household formation have played a significant role in depleting inventory levels from coast to coast over the most recent decade, triggering chronic housing shortages in large urban centres that resulted in mini ‘boom’ and ‘bust’ cycles,” he said.
“If we don’t move now to build more housing in the current lull, it’s expected that this same scenario will continue to resurface over and over again.”
While inventory “remains key” to the health of Canada’s real estate market, RE/MAX said that affordable housing depends on supply.
The lack of housing supply, along with rising mortgage rates, is keeping would-be buyers in the rental market, leading to even fewer homes being put up for sale.
“Current market realities have upended the economic viability of many developments, causing new residential projects to be cancelled or put on hold indefinitely,” said Elton Ash, Executive Vice President of RE/MAX Canada.
“The trouble is that housing development is a slow process, and experience tells us the only thing slower might be government processes,” Alexander said.
“Removing barriers and cutting red tape is necessary. A crisis is looming, but the outcome is not cast in stone. There is a short runway to reverse course before the impacts become very real for Canadian homebuyers and renters.”