2018 was quite a disastrous year when looking at the performance of the housing market. In 2019, it looked a lot better with sales going up by approximately 22%. With sales hover above 10-year averages, the home price index is higher. It has increased by 3.5% from last year’s numbers and the trend is for it to continue increasing.
Homeowners are no longer listing their homes up for sale and this is the phenomenon that is driving this resurgence. With not many new listings, there is a decline in inventory. In December of 2019, the sales to new listing ration went up to 67%. This is the highest this has been since October of 2009. A ration of 40% to 60% is considered balanced and anything above 60% will put pressure on prices, causing them to rise. When looking at the statistics on a deeper level we see that listings haven’t been this low since February of 2010.
Why Are Canadian Homeowners not Listing Homes for Sale?
You will find that most places in the country are seeing an all-time high in prices. Canadian housing is on an almost 30-year bull market. So most homeowners are thinking that with prices continually rising there is no need to sell right away. In the meantime, any amount of correction in the market is met by global central banks’ ample liquidity. Banks aren’t increasing interest rates this time around. They are actually doing the opposite.
Leveraged buyers are finding incentives for taking more risks. Hoarding assets are now more attractive to homeowners even more so than putting money into bonds, savings accounts or GIC’s. The current market is not triggering or incentivizing Canadians to cash out and so new listings dot go onto the market unless it is extremely necessary.
What Does This Mean for First Time Home Buyers?
While there are not a lot of listings going up on the market, first time home buyers can find affordable housing solutions. Here at SilverBeam Homes, we are custom home builders that can help you make your dream of owning a home a reality. Give us a call, or send us a message. Let us set up a consultation and show you how you can own a home in a housing market that seems it is not going to be kind to you.