Is the real estate bottom here?

Although prices fell in January by 1.2% and are down more than 22% since the peak last February (and more in certain areas), there was a noticeable increase in buyer activity (showings, offers) relative to the past few months, especially in the last 2 weeks of month.

February has continued with that momentum and with this level of activity, could this finally be the bottom? It's too early to tell but demand to start 2023 has come on stronger than many had anticipated. This is in part because of the Bank of Canada signaling a pause in rate hikes (for now) and more buyers feeling that the bulk of the decline is behind us and becoming more comfortable to transact. While this is true, sales were still extremely low (actually lower than December which is unheard of), and rates remain high impacting qualification and affordability. The chart below tells a bit of a different story indicating perhaps, rather that the uptick in demand is only relative to the lack of new listings.

Active inventory (black line) has hovered very closely or below sales since the start of 2022 up until last spring where there was a market shift. Since then active inventory, new listings and sales have all been declining. However, the last two months seem to be showing an increase in new listings as well as supply whereas, sales are relatively flat. Something to watch for is whether the demand from the past few weeks closes the gap between sales and active inventory/new listings or the expected lift in supply increases this gap OR and perhaps more likely, the market continues to stabilize. This would be a welcome change and result in more confidence from those looking to trade (buy and sell) hopefully allowing us to return to a 'normal' market.

Only time will tell. All in all, the new year has started with a bit more promise than I had expected. I do expect more inventory to come on in February and March, and it will be interesting to see if demand matches.