Home > real-estate > Canada’s housing inventory approaching prior highs… not good for prices

Canada’s housing inventory approaching prior highs… not good for prices

Housing inventory i.e. number of homes available for sale is increasing since the beginning of 2010. See chart below and excerpt of accompanying note from Scotia Capital Economics

…in a typical year, the non-seasonally adjusted line shows inventories peaking by the very end of the year and into the very beginning of the next year. Inventories are typically low during the summer months after the Spring market has settled down. But this time, the non-seasonally adjusted stock of outstanding listings on the open market is rising appreciably during the summer. More important is that the seasonally adjusted overhang that compensates for such distortions during the year has the overhang now pushing back up towards the range of late 2008 and early 2009. On a seasonally adjusted basis, it would take about eight months to clear out the total number of listings on the market at current selling rates assuming selling activity remains unchanged [emphasis mine]

Increasing inventory is not good… we are following the same trend from mid-2008 to Spring 2009 when inventories rose from 6 month to 10 months and prices fell about 15-20%… the economic outlook then was uncertain and it is now “unusually uncertain”…

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