The Canadian housing market is seeing a significant uptick in new home construction, with the Canada Mortgage and Housing Corporation (CMHC) noting a countrywide 8 percent rise in September. A lot of this growth comes from a 10 percent increase in the construction of multi-unit buildings, reaching 207,700 units monthly. Single-family homes are also up by 3 percent, at a rate of 43,000 units per month.
This boost in construction is contributing to a higher number of homes on the market, which could potentially push home prices down. Even with a growing population, the sales of existing homes are dropping, adding to this potential oversupply.
Specifically, Toronto and Montreal’s housing stocks jumped by 20 percent and 98 percent, respectively. Vancouver’s inventory rose by 37 percent year-over-year, but the city also saw a 17 percent dip in housing prices in September. Home prices in Toronto, Montreal, and Vancouver have fallen by 1.3 percent, 0.6 percent, and 0.4 percent, respectively, thanks to an increase in the number of resale homes available.
Investors who entered the market when interest rates were low are now seeing the impact of falling prices and a more competitive landscape due to this new supply. With the completion of new housing projects and the continuing climb of existing home inventories, the pricing gap is expected to shrink.
To sum up, the spike in new home building is good news for potential buyers but presents a challenge for investors. The current surge in available properties and high levels of inventory could lower home prices soon. The Canadian real estate scene is under observation as it deals with this surplus, affecting both investors and future homeowners.
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