A Brief Note on New Listings Activity in 2023

Summary of Findings

• New listings in BC have fallen to 25 per cent below pre-pandemic norms.
   
• Most of the explanation for low listings is due to overall slow market activity, but a multi-decade high interest rate differential between old and new mortgages is playing a role.
   
• The situation should resolve with time, but the current period further highlights the structural problem of chronically undersupplied housing markets, which results in volatility and susceptibility to demand shocks.

The post-pandemic housing market has been notable for its stubborn refusal to track expectations. One of the most interesting and unexpected recent housing market trends has been the lack of new listings, which have been trending well below average in all areas of the province since the start of the year. At first blush, the lack of new listings is indeed counterintuitive. With borrowing costs at decade highs and high inflation squeezing household budgets, it seems reasonable to assume that new listings would hold steady, or even rise, as some overburdened households were forced to sell their homes. Instead, new listings have declined substantially in housing markets across Canada.

In this Market Intelligence, we show that the pattern of new listings we see is, in fact, a usual outcome of current market dynamics and underlying economic fundamentals. Contrary to expectations, we show that a sharp rise in interest rates has historically been a deterrent to homeowners’ listing their homes.