Canada

Greater Toronto and Vancouver Real Estate Markets Are The Fastest Cooling In Canada

The Canadian real estate market continues to get cooler. Canadian Real Estate Association (CREA) numbers show declines to the sales to new listings ratio (SNLR) in all but 3 major markets for August . The declines to SNLRs were largest Greater Toronto and Vancouver, last year’s hottest markets.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) is the indicator CREA uses to determine if your market is hot or not. When the SNLR is between 40 and 60 percent, the market is considered balanced. If the ratio is above balanced, the market is a “seller’s market,” typically meaning higher prices. When the market is below balanced, it’s called a “buyer’s market,” and prices typically decline. Simple enough, but there is a big warning when using this indicator.

If the SNLR is moving quickly, they have limited meaning. A fast falling SNLR, even if in seller’s territory, could see the market act more like a buyer’s market. Likewise, a fast rising SNLR in buyer’s territory could mean the market is acting more like a seller’s market. Like with all indicators, it’s best to not to rely on a single indicator. Instead, use several indicators to build a market context.

Canada’s Highest Ratios Are In Southern Ontario

The highest SNLRs are located in London, Windsor, and Ottawa. London had an SNLR of 77.1 in August, compared to 79.2 last year. Windsor hit 76.5, compared to 79.4. Ottawa, the largest of the three, reached 68.4, up from 61.8 last year. All three markets are in Southern Ontario.

Sales To New Listings Ratio – August 2018

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

Source: CREA, Better Dwelling.

The markets with the lowest SNLRs were in Edmonton, Calgary, and Toronto. Edmonton’s ratio fell to 45.8, compared to 49.8 last year. Calgary’s ratio hit 47.9, down from 55. Toronto hit 48.8, down from 59.3. Yes, even the lowest major markets across Canada are not quite in buyer’s market.

Real Estate East of Toronto Is Heating Up Fast

Markets that are heating up the fastest are Halifax, Montreal, and Ottawa. Halifax saw the largest rise with a ratio of 63, up 12.7% from last year. Montreal reached 67.2, up 11.07% from last year. Ottawa reached 68.4, up 10.68% from last year. The SNLR in all three of these markets are high, but no where near the nosebleed heights we’ve seen in other markets.

Sales To New Listings Ratio Change

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

Source: CREA, Better Dwelling.

GTA and Vancouver Real Estate Are The Fastest Cooling Markets

The fastest falling SNLRs are in Greater Toronto and Vancouver. Niagara had a SNLR of 60.1 in August, down a whopping 23.05% compared to last year. Vancouver was the second fastest with a ratio of 52.8, down 18.01% from last year. Toronto’s ratio fell to 48.8, down 17.71% from last year. All three of these markets saw massive price increases from 2015, so a slowdown is no surprise.

The fastest falling real estate markets are also the country’s most expensive. All three of the markets are coming off of record price gains, so some moderation is likely welcome. Despite the quick declines in ratios, almost no major market reached “buyer’s” territory. Having spent so much time in seller’s territory, it’s a little weird to not see a balance struck.

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27 Comments

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  • Paul 4 weeks ago

    Never in history has there been a major Canadian real estate market that retained double digit single year gains. This time is different though, because of… immigration? Land scarcity? Imported wealth?

    I’ve got news for you kids, ask your parents. They’ll tell all of those things are what people said in the 1990s.

    • Chow 4 weeks ago

      Especially the part where Asian investors will buy your home from you. The person with their net-worth tied up in a 300 sqft condo thinks they’re going to outsmart the millionaire asian investors. lol.

  • Miguel 4 weeks ago

    Montreal is only rising because they won’t implement a foreign buyers tax. The corrupt from Vancouver have moved here, and they’re speculating with the housing stock because the government has no teeth.

    • Scott 4 weeks ago

      Get out of here with your xenophobia. Montreal was stagnant for 10 years, prices are rising just a clip above inflation – which is how prices in growing cities are suppose to move. The problem is inflation is so absurdly high, because the BOC needs to devalue the debt bubble as quickly as possible.

      • showerthoughts 4 weeks ago

        It’s not a coincidence that Montreal real estate is rising after Vancouver and Toronto implemented a foreign buyers tax. They are directly related. Investors are seeing bigger returns in Montreal now, watch as prices accelerate even faster and still tell yourself that it’s just inflation 😐

        • Werry 4 weeks ago

          You know they’re selling Montreal projects in Toronto, right? This is going to surprise broke Canadians that are complaining that foreign buyers are the only ones that can buy a home, but there’s a lot of speculative money in this country as it is.

          Toronto is one of the largest financial hubs in the world, and not surprising – a lot of us know how to make money. Sometimes it’s using pre-sale construction.

        • Kamal 4 weeks ago

          You think foreign buyers are going after 5% gains, when there’s a 1% tax, 1% maintenance, and 5% commission to sell? No wonder Millennials can’t afford real estate, they have no clue how to invest.

          • Showerthoughts 4 weeks ago

            Has to start somewhere, Toronto and Vancouver had small gains before all the greedy investors (foreign and local).

        • RMS 4 weeks ago

          Totally Agree with you! I’m an investor myself in Montreal and this market is literally on fire. The supply in Montreal is extremely low where there’s even bidding wars now for renting apartments let alone buying properties. During the month of august, every single investor I know increased their rents by 150-200$ per unit in just 1 month (right after moving day aka July).

          *The people in the comment section are saying that it’s because of no foreign buyers tax. Well, that’s only partly through. What people don’t know is that Montreal is further divided (1/3 of the Island aka the West Side is an Anglophone Area vs. 2/3 of the Island being Francophone). keeping that in mind, the supplies are even more limited because the influx of immigration, all the billion dollars of investments happening (LRT and the upcoming mega-mall), and the foreign buyers are all localized in Western Montreal (Anglophone side). Basically, the housing boom is entirely on the WEST side. In fact, the median house price is about 350k in Montreal as a whole, but if you look at the West, it’s probably around 750-800k now.

          • Willy 4 weeks ago

            I thought there was rent control in Montreal . Am I missing something?

      • Raging Ranter 4 weeks ago

        While he’s not necessarily correct, he’s not being xenophobic. Shouting “xenophobia” at someone belittles the rest of your argument.

    • Justin Thyme 4 weeks ago

      Get over your obsession with investment money in real estate.

      You can get bigger returns by investing in the stock market than in the real estate market. Good managers can average 14% year-over-year returns in the stock market for half a mill plus investors, consistently, year over year. Far outperforming the real estate sector.

      • Nelly 4 weeks ago

        That would need skill and knowledge which real state investors lack. Real state investors thrive on hype and lies .. which of course others lack!

  • Ahmed 4 weeks ago

    Not to be disrespectful to the tragedy in Ottawa this weekend, but an external factor always restores sanity to a bubbly real estate market. You can probably count Ottawa out of the rally for the next few months.

    (wishing Ottawa a speedy and safe recovery).

    • Dave Ryan 4 weeks ago

      I’m sure Halifax and Montreal can carry the country’s economy. One being a small town reliant on Government employment, and the other being a city that is hemorrhaging youth and has some of the lowest wages in the country.

    • Joe 4 weeks ago

      I’d add to this that I figure the opposite. All the people who lost homes in Dubrobin (hardest hit town about 30 mins northwest of Ottawa) and anywhere else in the city; they’ll need to look for a new place. Less houses, damaged supply, scarcity rises, prices continue to increase. No? Just the way I see it.

      • KO 4 weeks ago

        They won’t be buying though. How many people have tornado insurance in Ottawa? Now how many of those people can afford to buy without transferring their downpayment?

        There may be more pressure on rental housing, and the government should help these people with placement, but from a purely household equity perspective, many people will have lost a good chunk of their net worth sadly.

  • Joshua Brokit 4 weeks ago

    Anyone else notice that banks changed all of their commercials from selling mortgages, to saving and responsible spending?

    • SUMSKILLZ 4 weeks ago

      Funny, I noticed this too yesterday. Savings account interest rates in ads. Online banking graphical dashboards to help you manage your budget. Quite the opposite of “you’re richer than you think” messaging.

      • Ian 4 weeks ago

        “You Need To Save More Than You Think”
        — Scotiabank

        At least it should be.

    • Daryl H 4 weeks ago

      Watching a commercial where they’re showing how easy it is to pay your bills and save as I was reading this. So much for Canada’s fastest mortgage commercials from the banks. LOL

    • Raging Ranter 4 weeks ago

      In other words, the banks now expect higher interest rates and are adapting their business model to that reality. Higher rates on mortgages and business loans and LoCs mean lower loan volumes. A lot lower. Anyone who thinks high rates make more money for banks need only look at their track record – the most profitable times are when interest rates are extremely low. Higher rates do mean a higher spread (i.e. better margins) for bank loans, but that is more than negated by declining loan volumes. Thus, banks need to make up the difference somewhere else. Trying to capture investment fees on peoples’ savings is the logical place to start.

      We’re back to the 1990s again. Look for a big ad blitz during RRSP season this year. That used to be a thing back in the 1990s, but it more or less disappeared in the early 2000s when rates fell, and the middle class quit investing in equities and and started leveraging themselves to speculate on houses. If the lenders are signalling that they believe this behaviour has run its course, it’s probably wise to conclude the same.

    • Justin Thyme 4 weeks ago

      In the US, TD bank (one of the top ten US banks, with more branches in the US than in Canada) is no longer pushing their banking services in commercials. They are pushing their investment and wealth management services. That is where the growth, and the money, is. Their banking services are just a foot in the door to pushing the real money – wealth management,

  • Kelli 4 weeks ago

    The US is going ahead with a bilateral agreement with Mexico, which if it completes, means we’ll have to negotiate separately. Losing the ability of Mexico backing our narrative means we’ll be making some major concessions, which are going to shoot our Loonie out of the sky.

  • Luxury BC 4 weeks ago

    Here in Victoria the luxury sales slowed real hard over the past two months. Lots of calls coming in still but sales are down about 15% on the Southern Island luxury market for our firm.

  • Justin Thyme 4 weeks ago

    This really, really seems to argue for evidence of a soft landing, than of a crash.

  • Ron Davidson 4 weeks ago

    I don’t know why with every massive housing bubble so called experts and others always say there will be a soft landing. In the whole history of the world there has never been a soft landing after a large real estate bubble. This is really wishful thinking and is not logical or factual in anyway. You could call for a soft landing if you could give an example or 2 from history…..but there are none. Vancouver and Toronto will be looking at declines of 50 – 80%. This is what history and facts tell us will happen. If we don’t learn from history it will repeat itself. It isn’t different this time.

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