Canadian real estate buyers are unusually busy at a time of year when no one’s selling. Canadian Real Estate Association (CREA) data shows the sales to new listings ratio (SNLR) increased across the country in November. The biggest gains were seen in Eastern Canadian real estate markets, while formerly hot markets are starting to ease a little.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is an industry indicator used to gauge demand. It’s exactly what it sounds like – the ratio of homes sold, compared to new listings on the market. By looking at this number, we get an idea of how fast the market absorbs homes, compared to people selling homes. It’s surprisingly easy to understand once the numbers are crunched for you.
Generally speaking, the higher this ratio – the more likely prices are to rise. When the ratio is below 40%, the market is a buyer’s market – when prices should fall. Between 40% and 60% is a balanced market, when the market is priced correctly for current demand. Above 60% is a seller’s market, when prices are expected to rise. In fast moving markets, the speed of change often becomes more important. Fast falling ratios tend to act like a buyer’s market, even when it’s in seller’s range.
Halifax Sees The Biggest Surge In Relative Demand
The fastest rising major markets are in Eastern Canada – Halifax, Montreal, and Ottawa. Halifax’s SNLR reached 77.6% in November, up 12.8% compared to last year – the fastest increase in Canada. Montreal follows with a ratio of 77.2%, up 7.7% from last year. Ottawa reached 77.1%, rising 7.6% from a year before – the third fastest in the country. Worth a mention, each of these markets not only have absurdly fast growth, the ratio is sky high.
Sales To New Listings Ratio
The sales to new listings ratio in selected Canadian residential real estate markets.
Source: CREA, Better Dwelling.
The Biggest Drops Are In Southern Ontario and Victoria, BC
The biggest losers are in Southern Ontario, and Victoria. Windsor made the biggest drop with an SNLR of 69.8% in November, down 6% from last year. London followed with a ratio of 72.8%, down 2.4% from last year. Victoria made the third biggest drop to 60%, down 1.9% from last year. Even though these markets all made substantial drops, the ratio is still very high. Though this could be a case where you should check out the impact of velocity.
Sales To New Listings Ratio Change
The percent change in sales to new listings ratio selected Canadian residential real estate markets.
Source: CREA, Better Dwelling.
Toronto and Vancouver Real Estate Are Both “Balanced”
Two of the largest markets in the country didn’t hit either extreme – Toronto and Vancouver. Toronto’s SNLR reached 57.1% in November, up 6.9% from last year. Vancouver reached 46.6%, down 0.2% from last year. Both are neutral, but Toronto made a very substantial climb. Vancouver on the other hand, it almost flat compared to last year.
Relative demand is increasing across the country, and not just in “hot markets.” Winter inventory is typically pretty scarce – I mean, who wants to sell their home in the winter? But this year we’re seeing an unusual spike in the number of buyers. Much of it is likely demand pulled forward from a slower than usual start to the year. However, that surge in demand could potentially cause a little FOMO into next year.
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Nice to see you guys finally listing east coast data. It’s like it was invisible up to now.
I’m with you Chris! I’m a Haligonian, and I agree with you, it’s nice to see BD do a piece on the Maritimes.
The propoganda message has began just as the new year and decade is about to start.
People have to realize the CREA is an institution which is effectively an “organized real estate agents”. They just make up phoney stats to sway the hardworking Canadians into taking on more debt by creating FOMO and the banks and their economist and even the BoC and CMHC rely on the so called industry standard “Benchmark house price” data produced by CREA.
The past year, the Vancouver and BC markets have had a massive price declines ($100’s of Billion).
And are quick to say it is a Balanced market. They just make up stats as they go along. If 2 out of every 10 house listed are sold , how can this be a Balanced market? How bizzare! So clearly the entire Canadian housing industry machinery is geared towards creating the illusion of the linear price growth FOREVER!!
Just as the Central bankers have been manipulating the short term interest rates to keep the debt bubble going, in the case of Canada the CREA has been keeping the house price illusion going for their members who benefit from the 7% commissions they collect for every property sold. This cost is also contributing to house price growth that buyer ends up paying compunded over the term of their mortgage.
Buyer be aware!
While I agree that the premise that real estate industry does tend to portray data in the best posslbike light, there are those who do not own their own property who do the opposite the exact opposie by seizing on every data point in the most negative ligh
If prices are lower than the appear(whch i do agree with you) then how is it contributing to the ithe nceased cost of a housing, would that not make houses cheaper to buy? Is that not better than a situation where actual prices are higher than they appear? If BC real estate market has completly collapsed then why doe the province have the lowest unemployment rate in the country?
While I do agree with the premise that real estate industry does tend to portray data in the best posslble light, there are those who do not own their own property who do the exact opposie by seizing on every data point in the most negative light
If prices are lower than the appear(whch i do agree with you) then how is it contributing to the ithe nceased cost of a housing, would that not make houses cheaper to buy? Is that not better than a situation where actual prices are higher than they appear? If BC real estate market has completly collapsed then why doe the province have the lowest unemployment rate in the country?
Time to tax all none Canadians when they own residential real estate. Its good for taxation and for Canadians.
well said Mike
You are right in pointing that CREA is an institution which is effectively an “organized real estate agents