Canada

Most of Canada’s Major Real Estate Markets Have Softened Since The Pandemic

The pandemic has cooled down most Canadian real estate markets, and not just sales volumes. Canadian Real Estate Association (CREA) data shows the sales to new listings ratio (SNLR) is deteriorating in most major markets. Since February to May, all but three large markets saw inventory rise faster than sales. This trend appears to accelerate when markets have loosened restrictions.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) is self explanatory – it’s the number of sales, as a ratio of new listings. The higher the ratio, the tighter inventory is becoming, which can lead to higher prices. The lower the ratio, the looser inventory is becoming, which can lead to lower prices. I said it was self explanatory, didn’t I? This next part isn’t so much, but it’s dead simple.

This is the indicator real estate agents use to determine if it is a buyer or seller’s market. If the SNLR is above 60 percent, the industry considers it a seller’s market. When it’s below 40 percent, it’s a buyer’s market. Between 40 and 60 percent, and it’s a balanced market, which is priced right. It’s not a foolproof indicator, but it’s a decent start on understanding where the market is moving. One caveat is velocity – fast changing markets act like the direction they’re heading, not where they are. Now let’s look at the change.

Only 3 Markets Have Seen Sales Rise Faster Than Inventory

Since the pandemic, only 3 markets have seen sales increase faster than inventory. Hamilton made the biggest jump with an SNLR of 81.3%, up 17.2% since February. Kitchener follows with a ratio of 76.2%, up 24.5% over the same period. In a distant third is Calgary’s ratio of 53.3%, up 1.5% since February. It’s worth nothing the two with the biggest increases were still in lockdown during May.

Canadian Real Estate Inventory Is Rising Faster Than Sales During The Pandemic

The seasonally adjusted sales to new listings ratio (SNLR) for a pre-pandemic February, and a partially recovered May.

Source: CREA, Better Dwelling.

Markets With Looser Restrictions Are Seeing Inventory Rise

The rest are markets seeing inventory rise significantly faster than sales. Montreal made the biggest increase with an SNLR of 62.4% in May, down 31.4% from February. Fraser Valley dipped to 38.8%, down 28.0% over the same period. Vancouver had the third biggest decline with an SNLR of 40.1%, down 24.5%. All three of these markets have loosened restrictions since the beginning of the pandemic.

Canadian Real Estate SNLR Change By Market

The percent change for seasonally adjusted SNLRs from February to May, in selected markets.

Source: CREA, Better Dwelling.

Real estate markets across Canada are seeing inventory rise faster than sales, after the pandemic cooled things down. This was largely expected, and forecasted by banks and risk firms. The trend also appears to accelerate as markets reopen, but unemployment remains high.

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5 Comments

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  • Matt 3 months ago

    A lot of landlords in Vancouver are waiting to see if school’s are in person in September. If not, they plan on selling. Hard to carry an investment for 6 months.

  • zalzon 3 months ago

    Remind me again why CMHC chief, Evan Siddall bought up 150 billion of sub prime mortgage garbage from banks at 100 cents on the dollar with taxpayer money at the start of this pandemic?

    How exactly was that value for taxpayers money? Looks more like privatizing of profits for banks and socializing their losses on society.

    • Balky Bartokamous 3 months ago

      Why don’t you post a link of real information showing the mortgage quality. If you actually read the release it wasn’t sub prime debt in the least, it solid debt that was simply purchased in order to help keep the banks capitalized and lending.

      No need to lie here.

      • zalzon 3 months ago

        This debt is so “solid” none of the banks that profited from creating this loan want to insure any of that sub-prime junk themselves.

        Its so solid that banks literally lobby not to have private insurance companies bid on insuring the sub-prime mortgages because it would expose the enormous risk premium CMHC should be charging these banks but does not.

        So solid that banks quickly want to dump 150 billion of this garbage on taxpayers at 100 cents on the dollar at the very start of the pandemic knowing what the losses on it are going to be.

        And finally so solid that CMHC head himself says taxpayers should be ready to bailout CMHC barely 2 months into the pandemic.

        Yup, its solid.

        A solid scam that is.

        A simple question : Why should taxpayers insure 100% of the sub-prime garbage that banks profit from creating? And why no private sector insurance participation to determine the real premium taxpayers should be charging banks for insuring this sub-prime garbage?

  • Fight Back 3 months ago

    Propping up housing prices is a massive wealth theft from young to the old. The government is commiting horrendous crimes against its younger population.

    Can someone organize a housing crisis protest?

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