Canadian real estate buyers are taking a break after driving most of the country’s markets to new highs. Canadian Real Estate Association (CREA) numbers show the sales to listings ratio declined across most of Canada in January. There were only three exceptions, all located east of Toronto.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is a quick way to view real estate market demand, and is used by CREA. The indicator measures the ratio of home sales, to the number of new listings on the MLS. The thinking behind it is, by measuring same month absorption – we get a feeling for how hot or cold a market is. It’s how the industry can tell if a market is “balanced” or not.
Reading it is straightforward. If the ratio is above 60%, the market is called a “seller’s market,” where prices are expected to rise. If the ratio falls below 40%, it’s a “buyer’s market,” and prices are expected to fall. Between 40% and 60%, the market is considered “balanced,” and prices are just right. Be careful, fast moving ratios can change the market quickly. That is, sometimes a ratio is just making a brief stop in balanced territory before the market flips.
Real Estate In Eastern Canada Is Showing Improvements
Canadian real estate markets showing annual improvements were all located in Eastern Canada. Montreal showed the largest gain with an SNLR of 70.1% in January, up 6.6% from last year. Ottawa came in second at 70.2%, up 5.3% from last year. Quebec City is up to 52.6, rising 0.8% from last year.
Sales To New Listings Ratio – January 2019
The sales to new listings ratio in Canadian markets with more than 400 sales in January 2018.
Source: CREA, Better Dwelling.
That was it for positive indicators. Toronto real estate came in fourth at 49.5%, down 1.5% from last year. The national average was just under that in fifth at 54.3, down 4.3% from last year.
Real Estate In Western Canada Is Showing Further Declines
Western Canadian real estate led the way lower. Fraser Valley experienced the biggest decline with an SNLR of 48.5%, down 24.2% from last year. Vancouver real estate was in second at 43.3%, down 22.9% from last year. Calgary came in third with an SNLR of 45.9%, down 8.5% from last year. Fraser Valley and Vancouver are the country’s most expensive markets, and have seen some of the biggest gains. The cooling is therefore expected, after running overly hot for a few years.
Sales To New Listings Ratio Change – January 2019
The percent change of sales to new listings ratio in Canadian markets with more than 400 sales in January 2018.
Source: CREA, Better Dwelling.
Deteriorating macros following large price gains across Canada are cooling most markets down. Only 3 markets, which all underperformed the national price gains, are exceptions.
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And we’re sure politicians are working on it… as soon as Ottawa stops being one of the highest gainers, and they sell their real estate holdings.
It’s super odd in Ottawa. The population shouldn’t be able to support the type of gains that are being made there. And I’m talking about people with 2 incomes. Yet the prices keep rising and sales continue to happen (although nowhere close to what Toronto was experiencing). Here’s a link to historical year-over-year % gains in the Ottawa area, for what it’s worth:
https://www.agentinottawa.com/stats/
It’s shows a history of yearly gains/declines going back to the ‘50’s. When you look at this, Ottawa was gaining less than 2% from 2013 to 2016 (which was extremely low). I guess people looked for value in 2017 in Ottawa and haven’t looked back since.
One note on the link above: the first paragraph (at the top) changes from month to month. For the December numbers, things did not look promising, but based on the January blurb, I guess it’s back to recent status quo for Ottawa.
Let’s see if they end up blaming it on the Chinese.
Ottawa, where household incomes are 20-25% higher than Toronto, and there are generous inflation-indexed government pensions for retirement .
By those measures, a $1.5 million average Toronto detached should go for $2 million+ in Ottawa.
International Real Estate Bounty Hunters. Likely just hype, but if not, yet another wrench thrown into the gears of RE market at a bad time. Slowing money laundering via real estate is one thing, clawing back the funds from previous years, quite another. Yikes.
https://www.abc.net.au/news/2019-02-18/chinas-attempts-to-reclaim-money-from-inside-australia/10806228?dl=20190219
This is what Blue started preaching about months ago. Xi is calling back his money.
Damn straight Grizz, Silk Road 2.0, Ghost cities and propping up their entire financial market isn’t cheap. Unlike a ‘democracy’ where the princelings actually WANT/NEED to return after deploying capital and exerting influence, Emperor Xi was side swiped with the reality that once the tigers leave the forest not a one will return with their bounty. I’ve always wondered why Ma does nothing outside of the Sino Forest and determined he, more or less, can’t; dropping $100M on a house in Hong Kong is the farthest he is allowed to go…also, the US would probably snap him up like Huawei execs if started to throw his weight around too much.
China is a very funny duck in that they are very top heavy and unlike Russia, have very restricted social dynamics; you are either party or an outsider. In Russia, if you can lie/cheat/steal your way to the top, and don’t get knocked off on the way up, you are made an Oligarch. China does not operate that way and they are brutal in their suppression of dissidents only second to the Kingdom. Glad you’re still around Grizz; funny how the bottom feeders no longer pop in to cause a stir. Tock. BD4L.
The tigers might come back if their families are still trapped in the forest. I think a few big questions in regards to the Chinese investors is how much of their oversees RE spending was done with cash vs debt, and did they make these purchases as investments or as a PLAN B to the chinese economy imploding ……….. If their oversees purchases were for investment purposes and/or funded by HELOC equivalents on their Chinese assets I would expect a massive global RE margin call/ sell off. If paid in cash and as a PLAN B, than maybe the sell off wont be as bad, provided they and/or their families are not taken hostage. Surplus gone, reserves taking a hit, more and mroe drastic measures being taken by PBOC on a weekly basis …………… I don’t think it will be that easy for the tigers to get away.
And i’ll always be around Blue, just resting on the comments until the RE junkies come back
Blue,
Small point of clarification on Ma:
“Jack Ma just dropped $23 million on a 28,100-acre property in upstate New York”
Jun. 25, 2015
Jack Ma, founder and executive chairman of Chinese ecommerce giant Alibaba, has just purchased a 28,120-acre property in the Adirondacks, The Wall Street Journal reports.
https://www.businessinsider.com/jack-ma-buys-adirondacks-property-for-23-million-2015-6
Going back to yesterday’s discussion of double listings ending up with multiple sales data for the same listing – go look at Burlington listings on MLS. Almost all listings have a duplicate, and sometimes in different case or font on the title. Talk about number fixing!! This is ridiculous and someone should be accountable for this.
Dang, sure looks that’s way, so if a property sells, it literally goes down as 2 sales? Isn’t that, like, fraud?
Can you report that to their TREB, CREA and newspapers? I am not sure what other media can be involved, but if you have any proofs, take print-screens, gather data and send it to the newspapers or at least here on BD to the publishers. This garbage has to end and if you are not taking action, NOBODY will.
I feel this is happening in hongcouver too, but i have zero proofs and it may be just me being bitter about it.
If you provide a proof of duplicate sale entries for the same property with different MLS numbers I can try getting it escalated.
Hey guys so the reason this happens is because there are two boards. Treb and Burlington. So a lot of agents will list on MLS through treb and then interboard it because realtors only get full access to one or the other. This is mostly for Hamilton and Burlington. If they combine all the boards into one this wont happen. I’m pretty sure they account for this. However I do notice a lot of properties relisted multiple times.
I hear people, even bears say “sales can’t go any lower” and think, Oh yes they can! When the true panic and crisis hits, we’ll see sales to a drawl, but on a seasonality basis, of course sales will increase over the next few months, especially with prices having fallen.
This thing is in the first or maybe 2nd inning at most.
@Xelan_gta; look at almost any listing in Burlington for examples, and thanks btw.
CJ Ray,
That’s a listing not a sale. Two very different things.