Canadian real estate inventory may reach a crisis point, according to a new report released this week.
The RE/MAX Canada Housing Inventory Report analyzed active listings in eight major Canadian cities from July 2013 to 2022 and found that their inventory levels have fallen short of the 10-year average in seven of those markets in 2022.
The Greater Vancouver Area was down by 16 per cent with the Halifax-Dartmouth area seeing the most decreases at 65.5 per cent below the 10-year average.
According to RE/MAX Canada’s executive vice-president, Elton Ash, the decline in the Lower Mainland and Vancouver’s housing inventory levels can be attributed to issues with municipal regulations and getting approvals.
“It's taking upwards, at times, 10 years to get approval to move forward with a housing project. And so, it's very challenging, looking at the red tape that's involved,” he said.
Part of the issue is the rate at which the city is growing, he says.
“What's on MLS, is 16 per cent below the 10-year average. And yet we look at population growth in the Vancouver area and it's up almost 25 per cent between 2006 and 2021. So you've got two opposing trends occurring here,” said Ash.
The report cites Statistics Canada, which states that the country has seen a significant double-digit growth in population between 2006 and 2021.
“That is poised to increase further with Canada's commitment to welcome 1.2 million immigrants into the country between 2021 and 2023, combined with growth in new international students,” the report says.
Ash says there's no way for new housing starts to meet the demand, especially when diminishing resale inventory is taken into account.
He referenced the recent announcement from Prime Minister Justin Trudeau to launch the Senakw development with the Squamish Nation. The complex will include 6,000 rental units and 1,200 homes once complete.
“There's a good example of, let's say, out-of-the-box partnerships coming together with government assistance, [Canada Mortgage and Housing Corporation] and coming online with a major project that's sorely needed and that's required in all municipalities across the country,” Ash said.
While the report says housing markets are dwindling, Ash says that B.C. is experiencing an “interesting phenomenon.”
He says that prior to COVID-19 no one would have predicted the “crazy market” that occurred in Vancouver and Toronto. Now, he says, with the Bank of Canada interest rate hike to battle inflation there is a fear of recession.
“Historically, recession comes about when there's huge amounts of inventory, high interest rates or increasing interest rates, and no buyers and here we have low inventory,” he said.
However, following the release of statistics from the British Columbia Real Estate Association, he says that B.C. is “in essence a balanced market.”
“Which is a healthy real estate sales market. But you compare it to a year ago, two years ago, it seems like we're in a slump, but we have to look back and realize the last two years were extremely abnormal, and that we're really returning to normal,” Ash said.
