Canada

Canada’s Fastest Cooling Real Estate Markets Are In Greater Toronto

Last year’s hottest real estate markets, are this year’s fastest cooling ones. Canadian Real Estate Association (CREA) numbers show the majority of markets saw the sales-to-new listings ratio (SNLR) decline significantly in April. There were a few markets that are seeing the ratio rise, almost all located East of Toronto. The fastest cooling markets were around the Greater Toronto region.

Sales-To-New Listings Ratio (SNLR)

The sales-to-new listings ratio (SNLR) is the indicator that CREA uses to determine a buyer’s or seller’s market. When the SNLR is between 40 and 60 percent, the market is considered balanced. Above the range is a seller’s market. This is when sellers can start demanding more concessions, like higher prices. Below the range is a buyer’s market. This is where buyers can start demanding more concessions, like lower prices. Over the past ten years, Canadian markets have averaged 53.4%. Last year’s numbers were irregular for the whole country.

The indicator is helpful, but it’s not perfect. When the indicator is moving quickly (fast rising or falling), the “buyer’s” or “seller’s” labels may not apply. Sometimes the indicator makes a brief pit stop in the range, before heading to where it needs to be. It’s a great indicator, but it should be your starting point for investigating market trends – not your conclusive evidence. That said, let’s look at the numbers.

Canadian Real Estate Markets With The Fastest Rising SNLR

The regions with the fastest rising SNLR are all East of Toronto. Ottawa is the fastest rising market with a SNLR of 67.6%, up 17.16% from last year. Halifax has the second fastest rising SNLR with a ratio of 60.7%, up 14.96% from last year. Montreal is in third with a ratio of 65.9%, up 14.01% from last year. These markets did have a big jump, but all three of them barely climbed into seller’s market territory.

Canadian Real Estate Sales-To-New Listings Ratio – April 2018

The ratio of sales to new listings for Canadian real estate markets with more than 500 sales in April 2018.

Source: CREA, Better Dwelling.

Greater Toronto Real Estate Markets Have The Fastest Falling SNLR

On the flip side of the market, Greater Toronto and its economic suburbs experienced the biggest declines in SNLR. Toronto led the pack with a ratio of 46.4%, down 36.18% from last year year. Niagara did slightly better with a ratio of 62.8%, a 29.2% decline from last year. Hamilton saw the third largest drop with a ratio of 60.4%, a 28.94% decline. The concentration in the region is likely to have a stronger impact on the region’s economy.

Canadian Real Estate SNLR Percent Change – April 2018

The percent change of SNLR for Canadian real estate markets with more than 500 sales in April 2018.

Source: CREA, Better Dwelling.

Canadian markets are shifting to restore balance across the country. Markets with the fastest rising SNLR, didn’t enjoy the massive sales volume the year before. These markets are just entering into seller’s market territory, and starting to warm up. The markets with the fastest declining SNLRs are located in regions that were overheated last year. The movements are largely expected, but that won’t stop people from being surprised.

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34 Comments

  • Reply
    TORE 1 month ago

    Condo buyers in Toronto are in for a huge surprise when they find out how rising interest rates work with real estate prices.

  • Reply
    Michelle 1 month ago

    Foreign buying is really up in Montreal since the bans on Toronto and Vancouver. Good for the local market, lot’s of Mainland money arriving.

    • Reply
      Ahmed 1 month ago

      The FOMO is strong with this one.

    • Reply
      Grizzly Gus 1 month ago

      Money launderers aside (It will be a while before we know what % they made up of foreign buying) , I do not think those cash paying Chinese are as rich as anyone thinks.

      Could be wrong but I suspect a lot of them are using debt from home to make purchases here. Once here, if they have 35% down, banks like CIBC were willing to lend them the rest no questions asked. There have even been articles where a few banks have realized that they are exposed to chinese “ghost collateral”………..Know way of knowing for certain or how deep this rabbit hole goes until the dust settles………. I think its going to be bad

    • Reply
      Mark 1 month ago

      Until Doug repeals the foreign buyers tax and they all come back.

      • Reply
        Bluetheimpala 1 month ago

        Dougie will say anything to anyone…that’s why I’m struggling with the vote and a factor in a potential Orange revolution. He talks too much shit. If he just shut up and let Wynne bury herself he’d do himself a favour. Currently, he is kind of a joke like Crack Rock Robbie (RIP).
        His base will turn on him in a moment if they think he would let more ‘ethnic’ money come in…

  • Reply
    @xelan_gta 1 month ago

    Congrats GTA on leading the pack!
    If we do math for single cities absolute record belongs to West Vancouver with sales-to-new listings at 19% currently.
    Vancouver city – 43%
    Toronto city – 53%
    BD sometimes is confusing because by “Toronto” they mean just the city in one case and GTA in the other. In this case it looks like Toronto = GTA. I wish it would be more clear in the future.

    • Reply
      TO Agent 1 month ago

      It’s real estate board lingo.

      Toronto = All TREB regions.
      City of Toronto = City of Toronto proper.

      Same with Vancouver.
      Vancouver = REBGV coverage.
      City of Vancouver = City of Vancouver proper.

      Part of me thinks it’s the real estate board’s selling places like Vaughan as still Toronto. Don’t believe other boards do it, just the ones with the most opaque, overheated markets in the country. Foreign buyers think they’re getting property in Toronto, but they’re getting a far off suburb most of the time.

      • Reply
        Grizzly Gus 1 month ago

        Its funny, on the way up the industry loves to pump the GTA and even the GTHA. You’re all apart of our economic center!!!!!!!!!

        On the way down its all about separating the regions, so that Toronto Proper isn’t tainted by the surrounding regions.

        “Our economic center will always hold up because jobs, immigrants and world class”

        • Reply
          @xelan_gta 1 month ago

          Great observation, I noticed that too. My RE agent says: “I don’t care that suburbs or Jane&Finch have price declines, it will never happen to premium Toronto neighborhoods” Denial is still strong after 20+ years of bull market.

          • Al Daimee 1 month ago

            However there is a difference in central Toronto neighbourhoods from the surrounding areas. Bidding wars are still happening in some City of Toronto districts and there are properties languishing in others. The GTA as a whole is macro data and doesn’t come close to explaining what is happening in the market. You do need to separate GTA from City of Toronto to get an accurate picture of what is hot or not right now.

          • Grizzly Gus 1 month ago

            Micro factors – Certain areas climbed higher and faster than others on the way up. Certain areas will not fall as far or as fast as others on the way down.

            Macro factors – Easy and cheap money caused all areas of Toronto, GTA,GTHA, the province of Toronto to increase. Harder and and more expensive money will cause all of those areas to fall.

          • carlton 1 month ago

            Where are bidding wars happening in the GTA?

            Any recent examples?

          • vnm 1 month ago

            Same fake news as last time around, central Toronto got hammered the most in the 90s correction …. –50%.

            And that was before the perpetual traffic jams, skyrocketing homeless , and a shooting or stabbing in the headlines every every other day.

            http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html

  • Reply
    DataDude 1 month ago

    Redirection of buzz from one city to another with sophisticated ease, is quiet impressive though

    • Reply
      Ian 1 month ago

      Can’t help but wonder if this is the result of increasing concentration of news.

  • Reply
    Willy 1 month ago

    The sellers market in Montreal started in April of last year 2017 and is continuing. I have been a big bear on the RE market and have been doing extensive research across all areas and using different sources. My gut feeling now is telling me all the markets in Canada are going to almost plateau for a while then off again to slow growth at first heading into the next cycle. Cycles could take very long sometimes though so at this point it’s hard to predict how long for each cycle but for the short to medium term there’s gonna be apparently some kind of flat market. I can’t see a crash maybe just some minor corrections here and there.

    Now the question is am I happy with that? the answer is no because I was hoping for some substantial correction so the markets get healthy again but apparently it’s not gonna happen so I feel sad about the very high prices. Very bad for millenials and the new generation.

    • Reply
      @xelan_gta 1 month ago

      Willy, that doesn’t work like this, unfortunately.
      First of all when you are saying that prices will plateau. For how long? It will take more than 10+ years for fundamentals to catch up existing prices. How many investors will stay in the market with 0% profit for 10+ years?

      Second, in order for the next cycle to form we need either strong income growth 10+% (which doesn’t sound real at this point) or more borrowing (which is already at all time high and very big concern of Boc).

      The only realistic way we can form a new cycle is to flush existing debts through recession and bankruptcies (RE will tank obviously in the process). And then start a healthy growth from much lower price and debt levels.

      It’s unrealistic to expect new cycle to be formed on the top of existing one and also prices to plateau and investors not rushing for exit.

      I’m open to any links to studies or research which convinced you that your scenario is viable.

    • Reply
      Bluetheimpala 1 month ago

      Thanks for the troll! We’ll see you in 6 months for some more keen insights. God you millenials are so FOMO and short term it is sad.

      • Reply
        @xelan_gta 1 month ago

        Blue, that’s fine, don’t kill that guy:)
        I find a lot of people genuinely thinking that’s the scenario Willy described is the most likely scenario which will happen. Even my RE agent says something similar: “Prices will flat out for a couple of years and they will continue to grow at 8+%”
        They fail to understand that 8% price growth should come from somewhere it can’t just magically appear.

        • Reply
          vnm 1 month ago

          Willy, if you are trying not to appear like a total Dick, you might
          consider a less transparent monicker.
          A more screamingly ingenuous post would simply not be possible, even
          for you.

    • Reply
      carlton 1 month ago

      Why won’t there be a crash? will borrowers suddenly become solvent? Will interest rates crash to b.o.c. .5 again? I thought they pegged on another billion in debt last month. Haven’t sales crashed ? hasn’t inventory increased? Isn’t the bank appraising homes at 20 percent less? Isn’t the household debt at 1.70?

      my house is selling for a 100k less and rates have only gone up .75 ,and this just the start of a downward cycle.

  • Reply
    @xelan_gta 1 month ago

    What’s more expensive in USD dollar value?
    – NY metro area median property price
    – GTA median property price
    The answer is obvious, right?

    https://www.huffingtonpost.ca/2017/01/24/toronto-nyc-affordability-house-prices_n_14344230.html

    • Reply
      Jon Tario 1 month ago

      I have to add on to this a NYC resident moving to Toronto next month who has been watching both markets very closely. I am floored by the low quality, high priced housing in Toronto. At least in the NY Metro area a 1 million dollar home/apt will be recently renovated and in good condition. I really do not understand why so many of the homes for sale in Toronto are able to have such a high price point when the quality of the home is sub par. I’m noticing the same with rentals. I had a 1,000 sq ft apartment in a prime Manhattan area with brand new renovations in a well maintained building for $3500. That seems to get me 700 sq ft with patchwork renovations in a prime Toronto area. Something is very wrong. I love Toronto, thats why I’m moving, but it doesn’t compare to New York (wages are higher, more to do, bigger, wealthier, etc) How is Toronto so much more expensive??? Where is this money coming from? It’s depressing AF.

      • Reply
        Bluetheimpala 1 month ago

        here’s a quiz to help you understand where we are….Toronto RE prices are
        a)Normal, we’re all paper millionaires with our retirements locked down.

        b)A Little hot but sustainable, TO is a world class city so of course RE prices go up min 3% but double digit growth is normal every few years.

        c)In one of the worst bubbles that a modern, western economy has allowed to happen.

        BD4L

        • Reply
          @xelan_gta 1 month ago

          would be interesting to see results of such poll among the general public.

      • Reply
        @xelan_gta 1 month ago

        Thanks for your comment Jon, great to hear your real life experience.
        The reason is very simple, we(Canadians) borrowed as hell to bid up the prices. We are now the most indebted country in the world based on Private Debt-to-GDP. We have 50% of all pre-construction condo units in Toronto bought by investors/speculators recently. This is just out of hand but fortunately people can’t borrow indefinitely and everything points to a major RE correction in GTA and GV within the next 3 years.

      • Reply
        JC 1 month ago

        Well, you can certainly do better than that. I just rented a nice 1200 sq. ft, duplex with parking and Internet/TV for $2100 a few blocks from Casa Loma.
        You can still find “reasonable” apartments in central Toronto in rent-controlled buildings, but to get a leg up you have to contact the management companies directly. I came across a half-dozen good options in the $2500 range that way.
        I remember the days in NYC when apartments were so scarce that people browsed the Obituaries for unique sounding names they could track down addresses for in the phonebook when in search of vacancies.

    • Reply
      vnm 1 month ago

      And that was in 2016, before the market really went off the rails.

    • Reply
      question guy 1 month ago

      property taxes are hella huge in NY metro area… like 4x GTA rates

  • Reply
    Chuck 4 weeks ago

    I track prices quite closely. I not only look at what comps sell at, but also what all houses in the area sold at through different years and calculate the % increase.

    For example, take two comps (similar lot size, bedrooms etc). house A sold for $370K in May 2011 and house B sold for $400K in May 2011. House A sells for $700K and no apparent major work was done. Based on sold history I would value house B at $750K.

    Using this method prices dipped June-August and started to climb back up. Prices are now higher (at least in my area) than this time last year almost across the board but not by much (approx 3%) but are still down around 7% from the peaks of Feb-Apr.

    The top areas are doing best. Some places, like Scarborough and the suburbs haven’t had the same level of bounce back.

    I am also mostly focusing in on the $600K to $900K range.

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