Canada

British Columbian Real Estate Markets Are Still The Fasting Cooling In Canada

Canadian real estate markets are cooling, especially in Western Canada. Canadian Real Estate Association (CREA) numbers show the SNLR fell across Canada. The indicator, used to gauge demand by the industry, increased in just 3 major real estate markets – all in Eastern Canada. Markets in Western Canada led the index lower, while Toronto chilled in the middle of the index.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) measures the absorption of homes for sale. The ratio is pretty simple, it’s just the number of sales in a month, compared to the number of new listings. The measure is how CREA determines if a market is slanted towards buyers, sellers, or balanced.

Boring, you just want to know how to read it – we know. If the ratio is below 40, the market is a “buyer’s market.” That means prices are likely to fall, and buyers can ask for more concessions. When the ratio is above 60, it’s a “seller’s market. That’s when prices rise, and buyers do stupid things like skip inspections. Anything between 40 and 60 is considered balanced. It’s not foolproof, and the biggest, most obvious, issue is with fast moving SNLRs. If it’s dropping quickly, the print may not drop fast enough to reflect true demand measures. Ditto if it rises quickly. That said, let’s go to the numbers.

Major Real Estate Markets East of Toronto Are Getting Warmer

The markets with the biggest jumps in SNLR are Montreal, Ottawa, and Quebec – in that order. The SNLR in Montreal reached 69.3 in November, up 12.14% from last year. Ottawa reached 69.6, up 8.92% from last year. Quebec City is third with an SNLR of 52, up 0.19% from last year. That’s it. Only three markets grew.

Sales To New Listings Ratio – November 2018

The sales to new listings ratio in Canadian markets with more than 500 sales in November 2017.

Source: CREA, Better Dwelling.

The Fastest Cooling Markets Are In British Columbia, Alberta

The fastest cooling markets are in Western Canada, including all of BC’s large markets. Vancouver’s SNLR fell to 46.8 in November, down 28.44% from last year – the largest drop in the country. Fraser Valley followed with a ratio of 52, down 27.27% from last year. Calgary came in third with a SNLR of 47, down 13.6% from last year. In fourth is Victoria at 61.9, down 13.35% from last year. Toronto is in the middle of the list, with a ratio of 49.9, down 5.67% from last year.

Sales To New Listings Ratio Change – November 2018

The percent change of sales to new listings ratio in Canadian markets with more than 500 sales in November 2017.

Source: CREA, Better Dwelling.

Slowing growth across the country indicates macro issues are at play. Throttle credit growth, higher interest rates, and mountains of debt have Canadian tapped. The buying slowed in almost all regions, except for 3 markets that underperformed. The industry doesn’t expect this to change course by much in the future either.

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18 Comments

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  • Fraser M 5 months ago

    If the declines are this bad in BC, and prices are stalling, I think we’re doing pretty good. There will be a proportionate bounce in sales after the declines.

    • Smaug 5 months ago

      There will be a proportionate bounce in sales after the declines.

      In 5 years or so, sure.

    • Bluetheimpala 5 months ago

      Prices are trailing. You’re looking at the blood and suggesting it isn’t as bad as it should be and reading a positive. I’m looking at the blood and getting on my thigh high waders. I guess we’ll see. Tick tock. BD4L.

      • @xelan_gta 5 months ago

        There is nothing to see, you are absolutely right Blue. Inventory is trending up in Vancouver big time so there is no light at the end of the tunnel yet.

  • Quan Li 5 months ago

    Not pretty. Slowing home sales in the country’s most expensive market means a lot less mortgage growth for the banks. The banks are rapidly raising deposit rates to get cash flowing again too, which means the cost of borrowing a mortgage might actually go higher or stay the same after the next interest rate cut.

    “It’s the first time you’re seeing heated competition since the financial crisis,”

    https://www.reuters.com/article/us-canada-banks-deposits/canadian-banks-deposit-battle-adds-to-funding-cost-pressures-idUSKCN1NU0PF

    • Ian 5 months ago

      Canadians really have no idea what they’re looking at right now. When the BOC had to step into the mortgage market, it finally clicked that this is real to me. They wouldn’t have done that if they weren’t trying to mitigate systemic failure in my opinion. Which is good on them for trying to prevent it, but that means it’s knocking on the door.

    • someguy 5 months ago

      The worst part is those very same people will be bitching and whining during and after the crash, complaining about JT (or whoever else) and demanding government help. I’ve been mentally preparing myself for that for some time, but it’s gonna be rough.

      • Smaug 5 months ago

        Just like the Wall Street crybabies who are demanding the Fed back off on its rate hikes and balance sheet reductions.

        No smack addict is ever happy about a reduction in the supply of heroin, so I guess we should not be surprised that Wall Street QE junkies are crying over an end to the free Fed money.

        Canadian HELOC junkies borrowing against their home equity to support their inflated lifestyles (or to leverage into even more real estate) will be suffering similar withdrawal symptoms and shrieking a similar tune.

        • someguy 5 months ago

          Yup. No surprise, just infuriating.

          Gotta help out those hard-working investors, just trying to stay afloat and provide for their families. After all, nobody could have seen it coming.

  • Investor 5 months ago

    The big elephant in the room is how to stay in tandem with the US Feds on interest rate so that CAD won’t go bananas; at the same time, not burst the bubble that is our fragile economy.

    • Mtl_matt 5 months ago

      The outcome was always going to be a choice between people that are affected by inflation (fixed income, retired, older and the poorer), and highly endebted people. I expect them to try to cut the baby in half and go for 3% inflation officially.

  • Stratfordian 5 months ago

    What’s happening in the west IS going to happen here in the Golden Horseshoe. You’re kidding yourself if you think otherwise. The same fundamentals (or lack of) are at work here. They might be getting the first hit by the lack of foreign buyers, but that will still cascade over here. Especially with the US heading for the ‘R’ word.
    Btw – Even Alan Greenspan is saying the end is near and telling investors to ‘run for cover’.

  • @xelan_gta 5 months ago

    Everyone who thinks Toronto downtown condos are the most solid piece in the whole GTA RE market and won’t be affected by the current downturn may want to check November sales stats:
    http://bildgta.ca/ourindustry/newhomemarket/new-home-market-November

    Toronto core new condo sales declined 54% compared to 2017 and 58% compared to 2016.
    Declines are even worse than overall GTA new condo sales.
    Interesting, isn’t it?

  • Joseph 5 months ago

    I’ve been following the CAD closely over the last 6 months. It’s fall has been swift. As I write this, this is the first time in years that it’s dropped under 74 cents. It’s sitting at 73.8 cents.

    Good times!

    • Rodeo 5 months ago

      It was at 73 cents mid-2017

    • Bluetheimpala 5 months ago

      Or $0.68 Jan 2016… so I mean you’re correct but in the same way my son is correct when, a week after going to ‘reptilia’, he complains that that ‘daaaad we never go to reptilia’…sweet lord Joey, I love when people contribute but hyperbole is gonna get some ‘hyperbo-nuts-in-yo -face’ if I’m not sleepy and paying even remote attention. Sorry for being a dick. the apology is only for santa. Tick tock. BD4L.

  • Joseph 5 months ago

    Nope, all good, Blue. I cannot believe I don’t renember those dips in the CAD (or jumps in the USD) like you and Rodeo pointed out. My brain’s deteriorating like the CAD over the last few weeks (not years).

Comments are closed.