Canadian real estate demand is still slipping, by at least one industry indicator. Canadian Real Estate Association (CREA) numbers show the National SNLR decline in March. Western Canadian markets were the biggest losers, accounting for most of the declines.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is one of the quick ways to gauge demand for real estate. The indicator measures home resales compared to the number of listed for sale on the MLS. By measuring the same month absorption, we get a feeling for how hot or cold the market is. Organizations like CREA use this number to determine if the market is “balanced,” or how far off it is.
Considering it’s such a powerful indicator, it’s easy to read. If the ratio is above 60%, the market is a seller’s market – where prices are expected to rise. If the ratio falls below 40%, it’s a buyer’s market – where prices are expected to fall. Between 40% and 60% is a balanced market, and prices are considered balanced. No indicator is 100% accurate and foolproof, so exercise some caution. One of those times to watch closely is when it’s fast moving. The quick move could be a sign of a sudden shift in sentiment. Great if you’re selling in a balanced market, and it’s going to turn into a seller’s. Not so much if you’re selling in a balanced, and it’s dropping into a buyer’s market.
Only Four Major Canadian Real Estate Markets Are Seller’s Markets
Only four major real estate markets made improvements by this metric. London has the highest SNLR at 74%, down 4.5% from last year. Ottawa reached 71.8%, up 5.2% from last year. Montreal rached 71%, up 5.8% from last year. Hamilton came in fourth with 61.4%, down 1.5% from last year. For context, Canada as an aggregate is at 54.6%, down 2.6% from last year.
Sales To New Listings Ratio – March 2019
The sales to new listings ratio in Canada’s largest residential real estate markets.
Source: CREA, Better Dwelling.
Western Canadian Real Estate Has The Slowest Markets
No Canadian real estate market is a buyer’s market, but the closest markets are in Western Canada. Vancouver has the lowest SNLR at 40.5%, down 23% from last year. Edmonton fell to 44.1%, down 3.7% from last year. Fraser Valley fell to 46%, down 25% from last year – the largest drop in the country. None of these markets are entirely in a buyer’s market from this metric, but some segments of homes are.
Sales To New Listings Ratio Change – March 2019
The percent change in sales to new listings ratio in Canada’s largest residential real estate markets.
Source: CREA, Better Dwelling.
The national market is inching closer to balanced territory, but no major market is a buyer’s by SNLR. You can debate whether or not that’s a sign of the market’s resilience, or how inflated these markets have become in recent years.
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I think it’s a sign of how strong demand is, and how little inventory exists. I can personally vouch for London. Young people from Toronto are bringing their big budgets, and setting up home here because it’s much more affordable and you still get a city feel.
Bottom has fallen out of Vancouver. A lot more “new” listings are going to be hitting the market throughout the spring.
“The problem with fiction is that I t has to be plausible. That’s not true with non-fiction.” Tom Wolfe
Translation: crazy sh*t actually happens, with no warning. Truth is stranger than fiction.
Watch out below.
Check this out on BNN this morning:
Slow motion train wreck happening
Boomers are now 63 on average – they are likely staying put for awhile. Expect low volumes to continue for awhile.
Easter weekend, detached and semi listings seemed to double overnight in my Aurora neighbourhood. Asking prices ignore comps, they are shooting for 2017 prices or higher. What a freakshow.
I meant the number of listings doubled. All these new listings have silly high prices.
The property ladder is also impossible. The difference between a town house and a detached is double the price in my area. People are completely out of touch as to what a detached should be listed at. This is the results from years of effective Real Estate marketing. But nothing is selling. Eventually sellers will have no choice to lower prices as incomes are not going up and peak pricing fatigued in 2017. People are in denial that we are experiencing a correction and its only going get worse in the next few years. Realtors are saying this is a good time to buy. Good for their commission.
Stuff is selling, if the price is right. That was not the case last fall. But there is a whole lot of product not selling too, because the prices are silly high. I’m batting 1000 guessing which homes will sell in less than 14 days based on the first list price. If the list price is right in line with comps it moves fast. Out comes the red SOLD sign. That in and of itself is shocking to me given credit tightening at the banks.
Oil has gained 2 US dollars two. Gasoline 5 cents. I wish I was a rich man where inflation does not affected me. I guess Canadian people are immune against inflation.
Expect BOC to raise rate to combat inflation
home prices in GTA like oakville remain high and homes starting to sell quicker, expect a boost in sales activity as pent up buyers return to the market this spring/summer for last chance at low interest this year.
More quickly than what? Winter sales?
Secondly, what do you mean last chance at low interest? Bond markets are forecasting rate decreases not increases… Why do you think interest rates are going up?
we’re seeing an uptick in sales activity since April, houses starting to sell faster than past 3 months so call it a spring market if you will.
that is what i meant, last chance at lower interest rates this year in the short term, because rates are still below the neutral zone for bank of Canada’s goal for 2020 and inflationary pressures so the medium/long term forecast is up.
Do you know where I can find sales activity data? All I can find is whats on HouseSigma, and although April is not yet complete, April’s absorption rate appears lower than March’s.
“Maxed out Canadians”
Poloz appears to have converted a Swift Sharp quick correction and eventual rebound back in 2016 into a slow-motion train wreck that will last for decades because he didn’t start raising interest rates then. All it took was a quarter point every 6 months and then a quarter every 4 months. Now things are beyond control. Thanks to all Central bankers for getting us into this mess. Usually it’s always better to rip the Band-Aid off. Oh well…
Chinese buyers are coming back to Toronto. My fiend got outbid by a bully offer last week. Buyer offered 150k over compareables Apparently it was a Chinese company that buys and flips houses in Toronto. Cant complete with that.
I don’t believe that for a minute.
Chinese can only flip to other Chinese buyers because Canadians don’t have money to burn.
150k over? Was that the FBTax?
If it’s true we’ll see more like it, but I doubt it.
Origin of money not identified. As per usual, only Canada
Its very difficult to understand what’s happening in the market. In the past a sold home on more than one listing would count as more then one house sold. A single sale could counted as 3 sales. Data has been tweaked pushing prices higher.
Now we are comparing today’s data with faulty data from the past. If the federal government does not intervene (they should not) then those heavily indebted are going to be in trouble.
All their needs to be a recession, people losing jobs or higher interest rates (unlikely) and the deck of cards will fall.
I find the last 12 months very interesting. Obscene amounts of liquidity being pumped into every part of the globe, hell bent on keeping everything going. Drops followed by pops that create higher highs and higher lows, fundamentals out the door, flash crashes and things like oil and gold just trading whereever because *shrug*…I keep asking myself; to what end? Then I think about the age of disinformation and a seesaw. In 2007, we we all seemed to have our head asses but more so we left stocks and the economy to the ‘smart guys’ and it took the ‘big short guys’ to wade through data to get visibility on the true market but the smartest ape learnt a lesson and now everyone, Blue included, thinks he has a Junior PHD in macro and micro economics! In 2007 no one knew the seesaw was tilted one way just waiting to hit a threshold and then parts of the economy spill off…now, every Uncle Tony subscribes to a few paywalls and reads the news in anticipation of timing the market BUT that isn’t going to happen because it can’t or we’d all be rich for doing nothing. So the seesaw keeps going back and forth sort of shaking off the deadweight at the top and bottom but never tipping; this is much worse because as this goes on FOMO fed by leverage just keeps going. Canadian government putting a floor on rates is a fucking joke but exemplifies the age we’re in; can’t give the little guy and edge. Rush to one side of the seesaw too early or too hard and bam, you will screwed because of higher lows…until the music stops. When will that be? I believe this year and I see the craziness as an example of how desperate we are. I could be wrong. Tock.BD4L.
Seesaw, interesting analogy. As the oscillations get more intense, it’s like trying to ride a bucking bronco. That’s what happens when a feedback loop mechanism falls into chaos, e.g. PA systems when the volume is turned up too loud, climate change, the economy. It starts with intermittent glitches, and if let unchecked, can quickly deteriorate into systemic meltdown.
To much misleading stats, data collecting twisted. Unregulated Real Estate industry thats commission (conflict or interest) driven.
Low interest rates. Government incentives. Naive local buyers. Excellent marketing ( fear of missing out )
Foreign buyers, Foreign Corporation buyers, corrupt banks (HSBC), money laundering, developers building eye candy units for max profits, Real Estate money winning municipal elections for favours.
What could go wrong? 🤔
Theres a sucker born every minute.
Expect this RE bomb to blow around early to mid 2020 along with the stock market. It will start slow then rapidly, probably with a fed rate hike. We still havent seen the full effects of the 2018 hikes as theres a 12-18 month lag. Them going abruptly dovish says they see the bombs gonna blow and be much worse than 08.
Even chinese money launderers have their limits and we can see them start to withdraw from australia.They treat condos like stocks so when prices go down expect them all to run to the exit at once and DUMP.
You can also see affordability in rents hitting peak with best deals at top end of market. Ex. In my neighbourhood which is primarily wealthy asians a 1bd is 2100, 2bd 2500 but a 3 bed penthouse in the same building is 3500 lol.
John Snow..Your talk is cheap here…do your research before making a comment like you just did…you obviously are in RE I see..Talking up the market when you shouldn’t be just yet..the cycle is in its final stages..eventually it will have to conform to a market that can sustain itself on median income range for a family here or close to it on the high end. Vancouver is the canary in the coal mine don’t you know…I wish I had some good news to share as well but will not BS anyone here like your trying to do.
I am a real estate investor/ owner and based on my research/what I have seen in the oakvile area( you can find the same stats on bungol or housesigma) there has been an uptick in activity and those expensive detached homes are starting to sell, without a significant price drop…..look it up if you dont believe me.
In addition, a recent builders Preconstruction sale north oakville sold out within hours in March 2019..and prices were were comparable to 2016 highs.
“there has been an uptick in activity and those expensive detached homes are starting to sell, without a significant price drop”
That is an entirely false statement.
South East Oakville houses have dropped $1M per house in the last few years. What was asking $3M in 2016 is lucky to get $2M today. South Bronte has listings that were $3M begging for $2M, will probably take $1.5M by midsummer. Lakeshore Woods has listings at $1.6M that will sell for $1M once the vendors finally get a bite. Those houses were bought for $500k in 2007. It’s still an amazing ROI if you got in then. But if you ‘invested’ $1.6M in 2016/7 your done like dinner.
Needless to say, and spin it all you want, time will tell.
Stop trying to spin it in the other direction as if the roof is collapsing. The ultra luxury market dropped alot everywhere in Toronto. That is not what I am referring to. I should’ve clarified that.
Detached Homes in Joshua creek were selling for 1.2 and higher and 2016 are still selling for the same price today and higher.
Detached homes selling for 1.2 and higher in new north oakville in 2016 are still selling for the same price today and higher.
Even the homes around glen abbey are selling at 2016 prices now.
We call that “research” anecdote from where I come from. You know, when you buy a VW Beatle, all of a sudden you see more and more bugs on the road? Like that? And yes, investors and owners are notorious for falling into that trap. Anyways. Have a nice day.
I know the truth is hard to handle sometimes. Like when you research the house price stats for particular areas and realize you were wrong about prices tanking and real estate crisis across a city just because it happened in Vancouver or Sydney…which both were significantly more overvalued than toronto at the time of their crash.. however, buyer demand is still here and interest rates on hold..expect a rebound this summer in the market. corrections are only short term.
And..dont hold your breath for a Vancouver style drop in Toronto, that’s foolish. There are too many strong fundamentals of demand which will keep the market stable going forward.
Toronto is trailing Vancouver by approximately 8-9 months. I’m sick and tired of that strong fundamentals BS, Toronto never was and never will be special … sales volumes are down across the board and you know very well what comes next … major price corrections.
The market has already corrected by 15-20% since 2017 in Toronto…you actually expect it to tank like Vancouver is insane:
Better job market than Vancouver.
Fastest growing tech hub in north America, Vancouver not even close.
Continued immigration into the GTA.
Lack of land space and supply near city.
Demand from foreign investors
Any price discounts on housing will get gobbled up by buyers who’ve been on the sidelines for past 2 years.
Stop overthinking it.
What do you mean lack of space – Toronto is LESS dense than Vancouver. There are plenty of places to build. As to supply – well if we could get rid of all the ghost hotels there would be enough room for everyone. As of 2016 there were 12,029 short term only rentals. Imagine if those could be converted into long term rentals! We don’t have a supply problem we have a greed problem.
Toronto fundamentals dont matter in a full correction. Yes, Real Estate is local however, once the panic starts every RE market will impacted. Some worse then others. As long as theirs no changes to current lending regulations its only going to get worse and this is good. The economy overall suffers when all of peoples disposable income goes to servicing debt. Toronto is dangerously over priced just like Vancouver and will sink.
Unless interest rates go up to 6-7% and higher were not going to see a massive real estate crisis across the country. But the feds wont dare push it that far and risk our economy. Canada’s GDP needs home sales activity.
Until then, invest wisely 🙂
This jon snow guy is clueless.
Global RE markets are now heavily correlated.
London/NYC/Sydney/Vancouver all going down, but somehow Toronto is some kind of crown jewel that has “fundamentals” lol. More like it is a laggard.
Crashes in real estate dont happen overnight as it is a very emotion asset and prices tend to be sticky, they bottom out over 5 years or so.
Also the BOC has no choice but to raise rates in 2020 with the feds or completely collapse the currency like australia did. Seems to be working out for them lol. They now have both a housing collapse and currency collapse at the same time.
People need to understand every market cycles, you cant have a 20 yr bull market without eventually paying for it.
Of course the market will correct itself however you should temper your expectations on what that correction will mean In Toronto and how long it will last.
We are in the middle of it right now as you can see but dont expect a significant price drop across the board unless rates go above 5% which cause a crisis like the late 80s and 90s. Not all of Toronto real estate is overvalued as some of you may think.
People seem to forget in the GTA You still have cities like ajax, brampton, whitby, oshawa and parts of mississauga which are all very affordable for median income earners and not overpriced.
What should a person do if their entire retirement savings is in Vancouver real estate and bitcoin? Asking for a friend.
Vancouver and BC will become ghost town and province same as California. You will see people leaving Vancouver and BC because of the high cost of everything and low quality of life. 1.78 litter for gasoline in Vancouver. Eventually the only people that will be left in Vancouver and BC are governmental and municipals employees because of their high salary and drug addict because they have no money to leave. Everybody will leave. Same as California.
If Canada keeps going down people will leave Canada for the US, especiallyr Whites people.
Speak to a fee only financial advisor…….
Personally, sell the house and take a small loss today or a bigger one later. If you’ve owned the home for many years, perhaps you’re ok. If you borrowed against that equity, ouch,
No idea with Bitcoins. Bitcoins is not investing but more gambling. You can always make money in asset bubbles but also get burned. Theirs also tax implications that CRA is cracking down on.
Best advice is to speak to a professional regarding your friends finances and future goals. Good luck.
I think the present down turn in housing, most evident in Vancouver, is not because of the advertised problems. The stress test, taxes on foreign investors, vacancy tax all have been blamed on the housing down fall.
I’m firmly of the belief that over burdened Canadian consumer debt is the real reason, which will keep this housing downturn with us for a while. In fact the only reason that the consumer bankruptcy has not been a problem till now is, that real estate market was able to continue to keep rising at unbelievable levels . With the fall in real estate comes the inevitable consequence.
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