Economist Daren King of National Bank Financial Markets reports an increase in sellers cancelling their listings as they anticipate a decrease in interest rates.
In Ontario, 36 percent of listings were cancelled in September, significantly higher than the province’s average of 25 percent over the past few years. Nationally, 23.6 percent of house listings are being cancelled, compared to the usual 15.1 percent average.
King suggests that buyers and sellers are both waiting for interest rates to drop in the coming months, leading to the rise in cancelled listings.
According to King, sellers are aiming to sell when the market is more active to secure better selling prices and more options.
Cancelled listings outpace usual levels
King analyzes data from the Canadian Real Estate Association and notes a rise in listing cancellations despite an increase in new listings. This trend has led to a decrease in inventory due to sellers cancelling their listings.
“Despite a significant rise in new listings, inventory has been stalling due to sellers deciding to cancel their listings each month,” King explained in an October House Price Index report.
Higher cancellation rates linked to financial flexibility
While new listings increased in Canada in September, sales only saw a slight increase, resulting in a decrease in overall active listings due to cancellations. King speculates that some sellers were expecting a market pickup in the fall, which did not materialize.
King sees a positive aspect to the cancelled listings trend, indicating that sellers who can cancel their listings likely have good financial stability.
“If you can cancel your listing and wait, it shows your financial health despite the slowing economy,” King remarked.
Realtors use cancel-relist tactics for market advantage
Realtor Tom Storey notes that while cancelled listings are not uncommon, the current numbers are higher due to fewer houses selling. In Toronto, sellers often opt for a cancel-relist strategy if they plan a significant price drop rather than modifying the existing listing.
“Cancelling and relisting can present the property as new with a fresh price, attracting more potential buyers,” Storey explained.
A cancel-relist approach is typically used for substantial price drops to maximize market impact.
Vancouver sellings maintaining home listings
Realtor Scott Moe notes that most clients in Metro Vancouver are maintaining their house listings, but there is discussion about potentially cancelling listings and waiting to relist in the future.
Moe advises clients to consider market dynamics when deciding whether to wait for better prices.
First-time buyers and new mortgage regulations in focus for 2024
King believes many first-time buyers are waiting for updated mortgage regulations and better interest rates next year, with changes in amortization terms for insured mortgage loans expected in December.
The anticipation of lower interest rates and updated regulations is causing a shift in market dynamics, influencing both buyers and sellers.
Mortgage advisors are recommending longer amortization periods for first-time buyers, with flexibility to switch to shorter terms in the future.
Spring market anticipation as buyers look for rate relief
With expectations of interest rates decreasing, buyers and sellers are navigating the real estate market with caution and strategic planning.
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