Housing inventory may reach crisis point in major Canadian centres without intervention, says RE/MAX® Canada

Housing market balance and affordability requires prioritization of residential building activity

TORONTO, ON, Sept. 12, 2022 /CNW/ -- Inventory levels in major Canadian housing markets have been dwindling over the past decade, with active listings in July running below the 10-year average in almost all markets surveyed based on Canadian Real Estate Association data and insights from the RE/MAX network. This, despite softer overall real estate activity, according to the 2022 Housing Inventory Report released today by RE/MAX Canada.

The RE/MAX Canada Housing Inventory Report examined active listings in July from 2013 to 2022 in eight Canadian centres—Greater Vancouver, Calgary, Winnipeg, Hamilton-Burlington, the Greater Toronto Area, Ottawa, Montreal (CMA) and Halifax-Dartmouth—and found inventory levels have fallen short of the 10-year average in seven of those markets in 2022. Double-digit declines are noted in Halifax-Dartmouth (65.5 per cent below the 10-year average); Ottawa (down by almost 42 per cent); Montreal (down 40 per cent from the nine-year average); Calgary (running 26 per cent below average inventory levels); Winnipeg (down 23 per cent), and Greater Vancouver (down 16 per cent). The housing inventory shortage was less-pronounced in the Greater Toronto Area, where it was down almost seven per cent from the 10-year average. Hamilton-Burlington was the only market to buck the trend, reporting a nominal 3.2-per-cent increase over the 10-year average.

In analyzing the 10-year July average in the decade spanning 2003 and 2012, several markets experienced more active listings than in the most recent decade (2013-2022). These included the Greater Toronto Area (21,243 active listings versus 16,458), Hamilton-Burlington (3,473 active listings versus 2,304) and Greater Vancouver (14,352 active listings versus 12,792).

Active Listings -- July 2013 - 2022
Major Canadian Residential Markets
Actual
Time Period	Greater Vancouver	Calgary	Winnipeg	Ottawa	Hamilton-Burlington	Greater Toronto	Montreal CMA*	Halifax-Dartmouth
Jul-13	17,826	8,399	2,915	7,509	2,985	20,514	N/A	4,519
Jul-14	16,838	9,126	3,972	8,656	2,793	19,549	31,539	4,917
Jul-15	12,559	8,641	4,632	9,436	2,386	16,673	32,214	5,087
Jul-16	9,047	9,237	4,190	7,410	1,621	11,346	28,614	4,450
Jul-17	9,869	10,607	3,795	5,887	2,503	18,751	24,412	3,741
Jul-18	12,848	12,788	4,198	4,954	2,998	19,725	21,230	3,347
Jul-19	15,039	11,207	4,687	3,602	2,645	17,938	16,898	2,595
Jul-20	12,796	9,864	3,222	1,812	1,668	15,018	12,803	1,617
Jul-21	10,367	8,704	2,108	2,218	1,070	9,732	10,151	992
Jul-22	10,734	7,069	2,812	3,175	2,378	15,335	12,668	1,117
Total:	127,923	95,642	36,531	54,659	23,047	164,581	190,529	32,382
10-Year Average	12,792	9,564	3,653	5,465	2,304	16,458	21,169	3,238
% change in July 2022	-16.1 %	-26.1 %	-23.0 %	-41.9 %	3.2 %	-6.8 %	-40.16 %	-65.50 %
SOURCE: Canadian Real Estate Association (CREA), Quebec Professional Association of Real Estate Brokers (QPAREB), Centris *Nine-Year Average

"Supply was far more robust in the early 2000s in centres such as Greater Vancouver, the Greater Toronto Area and Hamilton-Burlington," according to Christopher Alexander, President, RE/MAX Canada. "That stability lent itself to healthy sales and price appreciation year-over-year and provided an anchor for the Canadian housing market during the Great Recession. 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. 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."

According to Statistics Canada, the nation has seen significant double-digit population growth between 2006 and 2021, and 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 strategy is aimed at propelling economic growth and reducing labour shortages. However, in the context of the housing stock shortage, the increase in newcomers combined with new household formation overall is expected to intensify the inventory shortfall further, especially in the major urban markets of Vancouver and Toronto.

Statistics Canada Census Data 2006-2021
Population	2006	2021	%+/-
Vancouver CMA	2,116,581	2,642,825	24.86 %
Calgary CMA	1,079,310	1,481,806	37.29 %
Winnipeg CMA	694,668	834,678	20.15 %
Hamilton CMA	692,911	785,184	13.32 %
Toronto CMA	5,113,149	6,202,225	21.30 %
Ottawa-Gatineau CMA*	846,802	1,135,014	34.04 %
Montreal (CMA)	3,635,571	4,291,732	18.05 %
Halifax CMA	372,858	465,703	24.90 %
Private households by household size -- one person
	2006	2021	%+/-
Vancouver CMA	232,130	304,035	30.98 %
Calgary CMA	103,545	143,160	38.26 %
Winnipeg CMA	85,020	95,435	12.25 %
Hamilton CMA	68,055	83,305	22.41 %
Toronto CMA	412,455	565,730	37.16 %
Ottawa-Gatineau CMA*	90,005	126,595	40.65 %
Montreal (CMA)	481,425	631,290	31.13 %
Halifax CMA	43,025	59,530	38.36 %
Source: Statistics Canada	*Ontario Only

Inventory remains key to the overall health of Canadian housing markets—affordable, accessible housing depends on supply. A recent report from Canada Mortgage and Housing Corp. (CMHC) concluded that the country needs to build 3.5 million new homes by 2030 to tackle the affordability issue, yet Canada is averaging only 200,000 to 300,000 new units per year.

"The truth of the matter is that we probably need more than the CMHC estimate to create the desired level of affordability," says Alexander. "During this window of softer demand, building efforts should be ramped up, not down. The offshoot effect is straining rental markets and contributing to ever-rising levels of homelessness throughout the country."

Population growth is not the only variable exacerbating the inventory challenge. New housing starts and purpose-built rentals continue to fall short. The potential housing supply issue threatens to push even more buyers into the rental pool, which itself is under pressure, as evidenced by rising prices. The result is the possibility of even fewer listings of homes for sale, as some of the rental stock that comes on stream actually pulls from the stock of existing dwellings already in short supply.  Meanwhile, a number of factors have emerged to create a perfect storm impacting available housing now and in the future, including inflation and rising interest rates, increased global supply chain interruptions, swelling construction costs and a serious shortage of trades labour, to high land acquisition costs and slow municipal approval processes. 

"Current market realities have upended the economic viability of many developments, causing new residential projects to be cancelled or put on hold indefinitely," says Elton Ash, Executive Vice President, RE/MAX Canada. "The feasibility of many new or planned housing starts is now in question, but the ones that already had smaller margins—affordable housing and starter homes—are at the top of the chopping block. If we're already experiencing an inventory crisis, what will the consequences be when demand rebounds?"  

Housing Starts by Dwelling Type (Centres 10k+)						Housing Starts by Dwelling Type (All Areas)
	Jul-22	Jul-21	YTD-22	YTD-21			Q2-22	Q2-21	YTD-22	YTD-21
Single	5,772	6,254	33,578	37,265		Single	20,629	24,100	33,566	39,825
Semi-Detached	858	993	6,258	7,116		Semi-Detached	3,557	4,209	5,968	7,121
Row	2,353	2,601	15,735	15,465		Row	8,751	7,645	13,769	13,306
Apartment	13,246	11,774	79,113	82,714		Apartment	39,377	38,678	67,368	73,557
Total	22,229	21,622	134,684	142,560		Total	72,314	74,632	120,671	133,809
Source: CHMC, July 2022						Source: CHMC, July 2022

Developer pullback is evident in light of softening demand in the short term combined with current economic and market realities. CMHC noted a decrease in the seasonally adjusted annual rate of housing starts in Canada's urban areas in July of 2022, driven by lower starts in the single-detached category. Stronger declines in multi-unit residential starts were registered in Vancouver, while a substantial slow-down occurred in both multi-unit and detached residential starts in Montreal. Yet, the trend is perhaps most pronounced in the country's largest housing market—Greater Toronto. According to the Q2-2022 Condominium Market Survey by real estate research firm Urbanation, approximately 35,000 new condo units were anticipated to launch for pre-construction sale in the GTA in 2022. In the first half of the year, close to 16,000 units launched. With less than 10,000 units expected during the remainder of 2022, it's estimated that at least 10,000 new units will be put on the shelf.

"The phenomenon of scrapped or paused development projects is a serious concern, and various stakeholders are taking stock and assessing future impacts," says Alexander. "The challenge is that we need a new development and growth strategy that is geared toward the long-term outlook. There simply isn't enough stock to keep pace with demand now, and the need for housing is intensifying with population growth. Although demand is currently softer that we've seen in the last two years, it is expected to rebound, and our market is not prepared for when that happens. We're seeing fewer housing starts at a time when we should be getting ready for the next inevitable upswing."

Purpose-built rentals, new-home construction and policies that support and accelerate residential building activity (including factors such as zoning, development fees and levies, approval processes, government partnerships, interest-free loans and incentives) are paramount to avert a deepening of the inventory crunch impacting Canadian housing markets. Without action, affordability will, without question, move further out of reach. A sustainable strategy is needed with an implementation plan that is fast-tracked.

"The trouble is that housing development is a slow process, and experience tells us the only thing slower might be government processes," says Alexander. "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."

Market Highlights by Major Centre:

Greater Vancouver

• Current inventory levels (July 2022) remain 16 per cent below the 10-year average (2013-2022) in Greater Vancouver.
• Active residential listings have deteriorated over the past two decades, with the 10-year July average of 12,792 (between 2013 and 2022) falling below the 10-year July average of 14,352 between 2003 to 2012.
• The Greater Vancouver Area is just one of three Canadian markets that experienced this phenomenon, despite an overall increase in new housing stock during the same period.
• Population growth in the Vancouver CMA climbed almost 25 per cent from 2006 to 2021, while single-person households rose almost 31 per cent over the 15 years.
• Against this backdrop, resale property values have experienced a significant uptick in recent years and while median prices have softened in response to higher interest rates over the past quarter, affordability remains a serious issue.
• Suburban markets, which once offered some respite from higher prices in the core, saw extraordinary gains during the pandemic as homebuyers sought more space.
• While demand remains tepid at present, as affordability improves, interest rates stabilize and consumer confidence grows, home-buying activity in Greater Vancouver is expected to rebound. 
• A number of new condominium projects in Vancouver have been delayed or placed on hold in recent months, with developers citing various factors from slow pre-sales to rezoning problems (source: Greater Vancouver Real Estate Direct)

Calgary

• Available inventory in July fell to its lowest level in a decade in Calgary as Alberta's economy continued to rebound. Active listings fell to 7,069 at the end of July, 26 per cent below the 10-year average for July between 2013 to 2022.
• The pace of home buying, which has slowed after an exceptionally robust first quarter, is expected to gain momentum as inventory levels decline further throughout the latter half of the third quarter and into the fourth.
• Calgary leads other major Canadian markets in population growth, noting an increase of more than 37 per cent in the 15-year period between 2006 and 2021. The city also has a high number of one-person households, at 38.6 per cent – all contributing to tighter market conditions overall. 
• In-migration from Ontario and British Columbia has also impacted inventory levels as a growing number of out-of-town buyers seek home ownership in more affordable markets such as Calgary.
• With borders now fully opened, immigration will likely play a more significant role in the years ahead. The federal government has committed to bringing more than 1.2 million new Canadians into the country between 2021 and 2023.
• Low vacancy and higher rental rates may also prompt more first-time buyers to move into the market.

Winnipeg

• Winnipeg's residential real estate market has softened due to higher interest rates, but still sits between balanced and sellers' market conditions.
• Approximately 40 per cent of freehold properties – detached/attached/townhomes – are still selling at or just slightly above list price. With the year-to-date average price for these properties hovering at $434,778 (MLS areas 1 – 9), Winnipeg continues to be one of the most affordable major housing markets in Canada.
• Active listings (for all residential) sat at 2,812 units in July, the second-lowest level in the 10-year period for the month of July, and 23 per cent below the 10-year average for July (2013-2022).
• Between 2006 and 2021, the population in the Winnipeg CMA rose 20 per cent. There was also a 12-per-cent uptick in the number of one-person households.
• More existing homeowners are staying in their homes longer. Cost of downsizing – especially if they are going to a rental – has increased.
• Rapid price escalation and rising interest rates had a slowing effect on the market in the second quarter of 2022, but in recent weeks, activity has picked up.
• Provincially, Manitoba continues to have one of the lowest unemployment rates in the country (3.5 per cent in July 2022). Labour shortages exist across the board, from the local Tim Horton's to construction sites. (Canada Labour Force Survey, Statistics Canada)
• A shortage of available land exists within the city for residential construction.
• In-migration is occurring, with buyers from Ontario and British Columbia seeking more affordable product.

Hamilton-Burlington

• Active listings in Hamilton-Burlington were slightly ahead of the 10-year average in July (2,378 vs. 2,304), but well-below the 10-year average of 3,473 reported between 2003-2012.
• After the initial shock of the Bank of Canada's decision to hike the overnight rate, homebuyers are adjusting to the new norm in Hamilton-Burlington.
• Hamilton-Burlington's peripheral areas – Dundas, Ancaster, Aldershot -- continue to be most popular with homebuyers.
• Hamilton's housing market continues to see an influx of purchasers from the Toronto Area, although the pace has slowed from 2020/2021.
• Immigration has been a steady contributor to the Hamilton-Burlington market and will continue to factor in significantly in the years ahead.
• Population growth in the Hamilton-Burlington area has climbed just over 13 per cent to 785,184 between 2006 and 2021, adding almost 100,000 new residents during that time period. At the same time, one-person private households have climbed 22 per cent to 83,305.
• Waning demand has prompted some builders/developers to shelve new purpose-built rentals and condominium projects Hamilton-Burlington.

Greater Toronto Area

• While active listings in July 2022, at 16,458 units, were almost seven per cent below the 10-year average for the month (2013-2022), they were considerably lower than the 10-year July average of 21,243 recorded between 2003 and 2012.
• Average price of a home in the Greater Toronto Area was $1,074,754 in July – up just over 33 per cent from $806,755 in July 2019.
• At a time when higher inventory levels would help keep housing affordable, increased development charges have been passed on to consumers, prompting developers to "landbank."
• Purpose-built rentals and condo starts have been shelved until 2023 throughout Toronto.
• At present, the buyers most active in the GTA market are those driven by life changes, be it job-related, marriage, a growing family, a grown family, retirement or divorce. Many are first-time buyers.
• Some "green shoots" have appeared in recent weeks, with open houses thriving and some multiple offers occurring on prime real estate in the 416 area. The difference in this market is that buyers will insert financing and home inspection conditions and offers may be at or only $5,000 over list.
• The highest level of activity is happening at the $900,000 to $1.5 million price point.
• Population in the GTA is up by 21 per cent between 2006 and 2021, adding more than one million people.  The number of single-person households has also climbed, up 37 per cent since 2006, to 565,730.
• History does not repeat itself, but it often rhymes – Mark Twain. We've been here before. The actions we take now will determine our future. At present, there is inadequate supply to accommodate future growth.
• This trend will be particularly evident in the Toronto core as employers expect employees to return to the office. Even in hybrid situations, there has been real movement into the core. Traffic is returning to pre-pandemic levels.

Ottawa

• While home-buying activity has stepped back from the frenzied pace of the first quarter in Ottawa, demand still exists throughout much of the nation's capital. This, despite a rather dramatic increase in active listings in the second quarter – rising from less than a month to two months of inventory.
• Active listing inventory remained low in July at 3,175, down almost 42 per cent from the 10-year July average of 5,465.
• Sellers' market conditions remain firmly in place, while buyers have more selection and better negotiating power.
• Population continues to climb in the Ottawa-Gatineau CMA (Ontario only). In 2021, Statistics Canada Census data reported the population had reached 1,135,014 – a 34-per-cent uptick over the 846,802-increase posted in 2006.
• During the same period, one-person households in the Ottawa-Gatineau CMA (Ontario only) rose by close to 41 per cent.
• Buyers and sellers are adjusting to new market realities, with some multiple offers occurring on well-priced product.
• Many buyers are looking for an indication that the market has reached its peak.
• Affordability has been a factor in the marketplace, drawing purchasers from the Greater Toronto Area in recent years. Core areas such as the Glebe and the Golden Triangle continue to see solid home-buying activity.

Montreal CMA

• Lack of available land and affordable product continue to impact the Montreal housing market.
• Strong home-buying activity in recent years has pushed housing values to new heights.
• Despite easing demand in recent months, well-priced homes continue to move, especially in Montreal's "hot pocket" neighbourhoods. Trade-up activity remains solid as existing homeowners take advantage of equity gains to move into larger homes or neighbourhoods closer to the core.
• Active listings in July were at 12,668, down more than 40 per cent from the nine-year July average of 21,169.
• Population levels have been climbing in the Montreal CMA, with more than 650,000 new residents added between 2006 and 2021.
• Single-person households have also been on the upswing, rising just over 31 per cent over the past 15 years.
• In 2021, Statistics Canada reported more movement from Ontario into Quebec than vis-versa, the first time on record. Affordability and lifestyle – joie de vivre – have factored into the decision to move for many.
• There has also been an uptick in American buyers looking for investment properties.
• Current levels of inventory will not support future growth.
• Shelter is a looming issue in the province, given rising rental rates. Finding an apartment that is priced below $1,500 a month is a challenge. This is expected to continue as movement into the core continues.

Halifax-Dartmouth

• While still in a technical sellers' market, home buying activity has levelled off in Halifax Dartmouth, especially when compared to the first quarter of 2022 and 2021.
• About 30 per cent of properties are receiving competing offers at present, down from 80 per cent in the fourth quarter of 2021 and the first quarter of 2022.
• Migration to Halifax-Dartmouth has slowed from other parts of the country as pandemic restrictions have lifted. Out-of-province buyers still represent about 15 to 20 per cent of buyers at present.
• Higher interest rates have also contributed to the slowing of home buying activity.
• Just 1,117 active listings were available in Halifax-Dartmouth in July, down more than 65 per cent from the 10-year average in July.
• Population levels have climbed almost 25 per cent between 2006 and 2021, rising from 372,858 to 465,703. Much of that growth has been realized in recent years.
• Halifax-Dartmouth has the second highest number of private one-person households at more than 38 per cent.
• The city is in dire need of new housing starts, as well as rental units. Vacancy rates are very low at present, which is placing upward pressure on rental rates. Given the provincial government's ambitious plans for immigration, the province will need to take significant steps to address future growth.
• Urbanization is occurring in the Halifax core, but more emphasis is needed to improve land use bylaws and development opportunities to densify. Halifax' Centre Plan has addressed some of these concerns, but the plan is still in its early stages.
• When interest rates level off and immigration picks up, home buying activity will gain momentum once again, placing pressure on already low inventory levels and average price. Year-over-year average prices are up over 20 per cent in Halifax-Dartmouth, sitting at $560,792 as of August 1^st.

About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.

Forward looking statements
This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX Canada

For more information please contact: Danielle Scott, APEX PR: [email protected], 416-909-5185; Lydia McNutt, RE/MAX Canada: [email protected], 905-301-5980; Eva Blay-Silverberg, Point Blank Communications: [email protected], 416-505-0627