Canada

Here’s Canada’s Hottest (and Coldest) Major Real Estate Markets

Here’s Canada’s Hottest (and Coldest) Major Real Estate Markets

Canadian real estate buyers weren’t exactly scarce last year, but demand is tapering in a number of major markets. Year end numbers from our pals at the Canadian Real Estate Association (CREA) show 2017 brought a shift in buying activity. Here’s how Canada’s largest real estate markets did, and whether they’re heating up, or cooling down.

Toronto Real Estate Sees Largest Decline In Sales

The largest decline in sales for 2017 was in Toronto, Victoria, and the Niagara region. Toronto, which closed 2017 with a total of 93,158 sales, is actually a decline of 18.1% compared to the year before. Victoria finished 2017 with 8,464 sales, a 15.6% decline compared to 2016. The Niagara region, in Southern Ontario, saw 7,280 sales, a 13.4% decline compared to last year. Before jumping to any conclusions, you’re probably going to want to read through to the end.

Yeah, I know. You’re wondering what happened in Montreal and Vancouver as well. Montreal saw sales hit 44,448, a 7.6% increase compared to the year before. Greater Vancouver finished the year with 36,604, a 10.5% decline compared to the year before. Remember, sales need a little context in order to make sense. So a rise or fall isn’t all that important, by itself.

Source: CREA. Better Dwelling.

Toronto Real Estate Sees Largest Increase In Listings

The largest inventory increases were in Southern Ontario, but Edmonton peaked its head. Toronto had the largest increase with 179,049 new listings, a 15.6% increase compared to the year before. Next is Hamilton-Burlington was second with 20,475 new listings, a 15.4% rise compared to 2016. In third is Edmonton with 39597 new listings, a 12.4% increase from the year before. Now let’s compare those sales to new listings.

Source: CREA. Better Dwelling.

Comparing Sales To New Listings

A common method for getting a read on demand is using the sales to new listing ratio. This is how CREA determines if your market gets the term “buyers” or “sellers” market. A balanced market, is 50%. The higher it is, the closer it is to a sellers market, meaning upward prices. The lower it is, the closer you are to a buyers market, so expect soft pricing. There are some caveats to keep in mind though.

The direction of this ratio can play an important role. For example, if you’re in buyers territory and the ratio is rising, you might be entering a bull market. If you’re in sellers territory, and the ratio is falling, you might be in buying territory soon. That said, to truly understand the numbers, when looking at these ratios you need some context, don’t just take it for face value. Got it? Onward.

Ottawa Real Estate Makes Largest Increase In Sales To New Listings

Topping the list for largest increase to sales to new listing ratios are Ottawa, Sudbury, and Montreal. Ottawa finished the year with 61.4, an 11.6% increase compared to the year before. Sudbury saw the second highest increase with a ratio of 56.9, a 6.9% increase from the year before. Montreal is in third with a ratio of 62.4, a 6.8% increase from the year before. For context, Vancouver, perpetually one of Canada’s hottest markets, has a ratio of 65.3. The large increases in Ottawa, Sudbury and Montreal mean these three are now healthy markets. It does not mean they’re the new Vancouver.

Source: CREA. Better Dwelling.

The largest decrease was seen across Southern Ontario. Greater Toronto had the biggest drop, with the ratio at 52, a 21.4% decline compared to the year before. Hamilton-Burlington had a ratio of 67.1, a 16.5% decline compared to the year before. Niagara ended the year with an average ratio of 71.2, a 14.3% decline compared to the year before. Yes, Toronto suburbs have a higher ratio than the city itself. It’s a little concerning.

Source: CREA. Better Dwelling.

Many of the countries most expensive markets are starting to take a breather, after having an exceptional run on prices. This doesn’t mean these markets will “crash,” but don’t expect them to grow anywhere near the pace they did. It’s also worth remembering that notoriously expensive markets will be disproportionately impacted by the new mortgage stress tests, especially in Toronto and Vancouver. The stress test won’t have a huge impact on less expensive cities seeing a climb, like Ottawa or Montreal. However, it will likely hold them back from growing as quickly as we’ve seen some markets increase over the past few years.

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21 Comments

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  • Reply
    Miguel 7 months ago

    Funny to read that Montreal was having such a big year last year, and seeing that sales haven’t changed all that much. I know the news needs to be “interesting” to attract viewers and readers, but they’re so sloppy when they do it. Thanks for the update.

    • Reply
      Aaron 7 months ago

      Looking to buy in Montreal right now. These are over entitled Boomers trying to extract every last penny from millennials possible. There’s foreign buying, but not to the extent that there’s locals that want to believe if they buy a home they’ll become rich overnight.

      We have an irresponsible relationship with real estate in this country, and we’re only starting to feel that way in Quebec.

      • Reply
        bluetheimpala 7 months ago

        When people lose their savings due to bankers getting greedy, people act crazy. Don’t get it twisted, we have and never will fully recover from the crash. Economically or psychologically. 65+ year old having to work, pensioners living below the poverty line, middle class shrinking, rich getting richer, powerful people do whatever they want. I believe investors/speculators started the wave as the market conditions made it easy peasy but once it picked up the FOMO took over for the regular Joe.
        We live in world where getting rich is the only goal for many and as a result they make bad decisions. Money is the root of all evil. Kittens are the only salvation.

  • Reply
    Naheed 7 months ago

    Forgive my ignorance here, but Victoria has a sales-to-new listing ratio of 74.6, but it’s down 9.1%? Does that mean the market is still a sellers market, or does the fall make it cold? It seems like there’s low inventory compared to sales, but the fall should mean it is cooling? Thanks.

    • Reply
      bluetheimpala 7 months ago

      >50 = Sellers
      <50 = Buyers
      The insanity has tapered. That's all.

    • Reply
      John 7 months ago

      By the numbers it remains a seller’s. But the numbers are a retrospective and don’t necessarily reflect this very moment.

      As blue said the only thing for certain right now is the insanity has been removed.

  • Reply
    Slick Mick 7 months ago

    Wonder where all of that new inventory in Toronto is coming from? 😂

    Thank you China, for strengthening capital controls. Shame on politicians for taking credit there.

  • Reply
    V 7 months ago

    Toronto is just warming up to go higher. Nothing changed about the city, it’s still the most desirable place to live in Canada. Investors getting in now, are going to make a killing by next year.

    • Reply
      bluetheimpala 7 months ago

      Yes, what typically happens in a downturn is a decline, then a bump and then a drop. In this FOMO world, I definitely see this happening. And quicker than expected; I don’t see this playing out over 2 years but 2-3 quarters and then taking years to recover. Rates have to go up. A fixed mortgage is getting tested at 4.99% right now; most people only lived in the 2% era when they got their $800K mortgage to pay for their $1M+ detached in Oakville. It was tough paying $3K+ a month for housing, when the term expires I don’t see how a lot of people can survive.
      Oh and something like 40% of mortgages (I don’t recall the stat, BD posted it) are resetting in the next 2 years…enjoy.

      • Reply
        John 7 months ago

        Most 5year fixed are sitting at 3.34% so they would be tested at 5.34%.

        It’s the greater of BoC posted rate vs lending rate +2% Right?

      • Reply
        Tommy 7 months ago

        You can buy if you can afford to, or sit on the sidelines and wait for a decline like people did in 2009 only to see their dream of ownership fade away. Even if a crash was to occur like it did in 1974 or 1989, it’ll take anywhere from 5 to 11 years to hit bottom. So if you have a full decade of time to spare in your life to put off living in a home of your own (a length of time that you could pay off virtually half or more of your mortgage), by all means sit out and wait.

  • Reply
    Arash 7 months ago

    Toronto sales are dropping by nearly a quarter, while listings are rising by nearly the same amount. There’s no way we see prices increase in 2018. Even if Royal LePage’s CEO is on the news every day saying it will.

  • Reply
    Patrick 7 months ago

    My agent said that there was less inventory than there has ever been in Toronto last year. That’s clearly a lie, and now I need a new agent. Any recommendations for an honest real estate agent in Toronto?

  • Reply
    Yu Don't Know 7 months ago

    Finally, a mention of Ottawa real estate. It’s getting insane here. We’ve been looking for a house over the past year, only to see the same type of place rise in prices by $100,000 in a year.

    I refuse to jump into a purchase I’m not comfortable with, but it’s getting ridiculous here.

  • Reply
    Investor 7 months ago

    For as long as the speculators can keep finding ways around the rules, the Toronto market will continue to be irrational, until that time when the centre can no longer hold. It’s not a question of if, but when. For those who bought prior to 2010, the impact likely won’t be severe, except for a sense of loss of unrealized wealth.

  • Reply
    bluetheimpala 7 months ago

    “Yes, Toronto suburbs have a higher ratio than the city itself. It’s a little concerning.” All you have to do is look at realtor.ca as a lay person to see what is going on. The early/smart/evil money in Brampton and Markham is jumping ship; the secret is out. There are so many obvious flips…no or limited furniture, everything looking new and sexy, ‘modern styling’ out the wazoo. Oh and the prices are great. Milton is looking so sweet, come fall it is going to be a candy store. Mississauaga is still fighting it off but that is to be expected; the housing was already high and I believe the higher end homes were the big money in Sauaga. Lost of $1.2M+ places just not moving as much.

    The name of the game was buy cheap assets. Hold or 2 years and sell with or without a reno. Any market, like Burlington or Niagara that was depressed due to fundamentals was ripe but not before Toronto and the immediate suburbs got fleeced.

    BD4L

  • Reply
    bluetheimpala 7 months ago

    And we have it BoC increases rate to 1.25. I think everyone on this site knew that was a done deal.
    2 more to come baby. Hoping for 3. Ratchet that shit up to 2% by year end!

  • Reply
    Nightmare Ahead 7 months ago

    Cannot wait for January 2018 sales numbers to reveal Toronto detached avg price down 8-12% in comparison to January 2017

    Cannot wait for March/April 2018 sales numbers to reveal Toronto detached avg price down 25% in comparison to March/April 2017

    http://torontorealestatecharts.com/2018/01/04/december-2017-detached-city-of-toronto/

  • Reply
    Professor of real estate 7 months ago

    why do folks want real estate prices to crash? terrible for the economy. they blame chinese foreigners but the chinese just transferred money to canadians owning crappy houses. last time i checked those canadians got rich for nothing and will spread that wealth in Canada as consumers or pass it down to children. GTA cannot be defined by any statistic. You have to look at each neighborhood stats. It is a gradient of decline in prices that emanate from the 416 downtown core: outside areas like Barrie, Guelph, Oshawa will pull back first and then 905. certain areas in 416 will be stable and then increase. I bought 2 detached homes in mississauga and just off bloor and christie a few years ago (6). The rent covers everything and the prices have increased dramatically. I’m not a flipper but an investor. The houses were crap and I put in money to renovate. I plan to keep until they are paid off and either give to kids or develop into new houses. The statistics are meaningless. Look at specific neighborhoods. There are still great deals out there. good luck to you all. 2018 is going to be interesting.

  • Reply
    Cyrus rahimi 7 months ago

    This is a joke, this is a make up story to see Toronto look bad!!
    you will see the market after Ontario election in June. The main reason is that there is not enough property for the buyers but they are trying to politicize it.

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