Canada

Toronto Is (Still) The Fastest Cooling Real Estate Market In Canada

Canadian real estate sales continue to cool, with few exceptions. Canadian Real Estate Association (CREA) numbers show all but 6 major markets (500+ sales) saw the Sales to New Listings Ratio (SNLR) decline. All 6 markets were located East of Toronto, while the largest declines were located in the Greater Toronto Area.

Sales-To-New Listings Ratio (SNLR)

The sales-to-new listings ratio (SNLR) is the indicator that CREA uses to determine a buyer’s or seller’s market. When the SNLR is between 40 and 60 percent, the market is considered balanced. Above the range is a seller’s market. This is when sellers can start demanding more concessions, like higher prices. Below the range is a buyer’s market. This is where buyers can start demanding more concessions, like lower prices. Over the past ten years, Canadian markets have averaged 53.4%. Last year’s numbers were irregular for the whole country.

The indicator is helpful, but it’s not perfect. When the indicator is moving quickly (fast rising or falling), the “buyer’s” or “seller’s” labels may not apply. Sometimes the indicator makes a brief pit stop in the range, before heading to where it needs to be. It’s a great indicator, but it should be your starting point for investigating market trends – not your conclusive evidence. That said, let’s look at the numbers.

Canadian Real Estate Markets With The Fastest Rising SNLR

The major Canadian real estate markets that are warming up the fastest were Halifax, Ottawa, and Montreal. The SNLR in Halifax rose to 61.1% in May, a 13.57% increase compared to last year. Ottawa hit 67.1%, a 12.77% increase from last year. Montreal’s SNLR hit 66%, a 12.44% increase compared to last year. Worth noting that all three of these markets east of Toronto, underperformed the general market last year.

Sales To New Listings Ratio – May 2018

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

Source: CREA, Better Dwelling.

Toronto and The Surrounding Region Is The Fastest Cooling Markets

The fastest cooling markets according to CREA are all located in the Golden Horseshoe. Toronto’s SNLR hit 46.9% in May, a 30.52% decline from last year. Niagara’s SNLR fell to 61.5%, a 28.57% decline from last year. Hamilton fell to 59.8%, a 25.9% decline from last year. The concentration of falling sales in the same economic region typically have broader consequences to the region’s economy.

Sales To New Listings Ratio Change

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

Source: CREA, Better Dwelling.

British Columbia Markets Are Cooling Quickly As Well

British Columbia’s real estate markets didn’t win an extreme movement, it was worth noticing. Vancouver, Fraser Valley, and Victoria all saw their SNLR make significant moves lower. Vancouver saw he SNLR fall to 57.7%, a 10.68% decline from last year. Fraser Valley’s SNLR hit 64.9% in May, a 7.29% decline. Victoria’s SNLR was still very high at 68.7, but at 15.6% lower than last year, is also the BC market with the biggest drop.

Coming off of a few record years of real estate sales, moderation should be expected. Markets, especially around Greater Toronto, saw massive gains that far outpaced fundamentals. Those markets are now underperforming national growth numbers, and likely will since we’ve literally never had a price bump even close that stick. That probably doesn’t make you feel any better if you were planning on flipping a property you bought last year, but c’est la vie.

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32 Comments

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  • Yuzheng 7 months ago

    Toronto has similar demand to Edmonton, funny.

    They’re trying to sell Edmonton condos in HK, but there’s too much risk. By the time they finished, who knows what the market in Edmonton looks like.

  • Dave 7 months ago

    New listings aren’t a good measure, since a listing can be cancelled and reposted three times in a month and counts as three new listings.

    • AgentX 7 months ago

      That actually makes it a better measure in my opinion. Processing a price reduction properly doesn’t increase new listings. Relisting is usually a questionable technique to lower days on market or to show that you sold it “over asking.”

    • Mark 7 months ago

      Statistically Dave is correct and it’s a pretty bad indicator for anything precise, and really can only give a very basic overview. You could have a single house listed 3 times, and eventually when it sells you’ll have a 1:3 sales:new listings ratio. That numbers is absolutely meaningless as that single dwelling in the real world is 1:1. Mind you when you look at the broad listings you can at least get a rough indication, but for anything else it’s pretty worthless.

  • Al Daimee 7 months ago

    Blanketing all of Toronto with this statistic is also highly incorrect. There are outperforming markets in certain neighbourhoods that are sought after. The majority of the Greater Toronto Area (what the Toronto Real Estate Board’s overall stats are drawn from) has inventory rising. This is not necessarily bad, since choice usually means prices stay in check/decline and we all know in Toronto a bit of a breather is required to allow income and savings to catch up to values. It avoids a more severe correction down the road when we have a mild one ongoing over a longer period of time.

    • Bluetheimpala 7 months ago

      Thanks Al. Always a pleasure seeing you stumble onto the block with your keen insights and added perspective since we all know you’re an agent. I spat coffee onto my laptop when I read “…a bit of a breather is required to allow income and savings to catch up to values. ” Yeah, like a 15-25 years breather…nice to see you and your ilk keep digging your own grave but be careful; eventually all you’ll have is darkness and no way to get out. Tick tock. BD4L.

  • Cat 7 months ago

    ‘LL
    I’m curious as to why you put so much effort into arguing on this site,it must take up a good part of your day.do you not have a job or is this your job to prop up the real estate industry, it wouldn’t surprise me if they hire bloggers to spread propaganda.
    Or are you an agent or broker that is worried about your lack of income.
    Or a investor that is trying to protect your investment.
    I come hear to get a positive opinion yes positive on where house prices might head,high house prices are not good for anyone other than those in the industry. (I have 3 adult kids with really good jobs and I don’t want them to be slaves to a mortgage.
    I can’t think of one sane reason as to why someone would come here to try and convince people that prices are going to go up.
    I truly believe you are a hired blogger by the industry.

    • Luigi Vampa 7 months ago

      Couldn’t have said it better myself! Very strange for someone to behave like that without motive.

    • Mark 7 months ago

      He doesn’t have much to do now that houses aren’t selling at all… probably just sits at his desk doing nothing 🙂

  • John 7 months ago

    LL is a lot less annoying if you just scroll past his nonsense.

    Stop feeding the troll.

  • Cat 7 months ago

    ‘LL.
    You didn’t answer,why your here.

    • Alistair McLaughlin 7 months ago

      He’s here to convince himself that he didn’t ruin himself by leveraging his home to buy an income property. He sees bearish sentiment as a threat to his plan, and thus spends his time trying to convince us otherwise. It allows him the illusion of control over his future. He’s already insolvent, but doesn’t realize it yet.

  • Cat 7 months ago

    Is your Xbox broken.

  • Cat 7 months ago

    This site was started so people didn’t only get information from the banks,government, and real estate industry.
    I appreciate what you have done hits not easy swimming against the current.
    Keep it up.

  • Cat 7 months ago

    (Bloor west)

  • Bluetheimpala 7 months ago

    Peeps, check out a good read:

    US housing bubble still getting frothy – we’ve been commenting on this for weeks/months and BD had a post a week or two ago about the global RE/credit supercycle.

    https://wolfstreet.com/2018/06/26/it-gets-spiky-update-on-the-most-splendid-housing-bubbles-in-america/

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