Canada

Toronto Real Estate Demand Slips Lower, BC Real Estate Demand Plummets

Canadian real estate listings are facing more competition, and less sales. Canadian Real Estate Association (CREA) numbers show the sales to new listings ratio (SNLR) fell across the country in December. The indicator, used as a proxy for demand, showed deterioration in all but 3 major markets.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) is one way CREA gauges local market demand. The ratio is exactly what it sounds like – the ratio of home sales, compared to the number of homes that hit the market. By comparing the ratio, we get an idea of how inventory is being absorbed. CREA uses these numbers to determine whether or not a market is a “buyer” or seller” market.

Reading these numbers are fairly straightforward. If the ratio rises above 60, it’s a “seller’s market.” That’s when the negotiation is slanted towards a seller. This usually means higher prices. When the ratio is below 40, it’s a “buyer’s market.” That means the negotiation is slanted to a buyer, who usually wants lower prices. Between 40 and 60 is a “balanced” market, meaning everything is priced right.

Generally we’re not looking at where the market is, so much as where it’s heading. If a market is in balanced, but gained a lot over the past few months, the assumption is it will become a seller’s market. When the SNLR is dropping and lands in balanced, it could be heading into buyer’s territory. Like with all indicators, this shouldn’t be your definitive conclusion on markets. Instead, combine this with your read on other indicators to get a better picture of the near term.

Ontario, Quebec Real Estate Markets Lead The Country In SNLR

The highest SNLRs for major Canadian real estate markets are in London, Ottawa, and Montreal. London, ON had the highest SNLR at 75.4 in December, down 3.3% from the same month last year. Ottawa followed with 69.7, up 5.6% from last year. Montreal came in third with 69.6, a 7.2% gain from last year. The ratio always skews a little higher in December, since less people list their homes for sale.

Sales To New Listings Ratio – December 2018

The sales to new listings ratio in Canadian markets with more than 400 sales in December 2017.

Source: CREA, Better Dwelling.

On the bottom of the list of major markets was Edmonton, Vancouver, Calgary, and Toronto. Edmonton had the lowest SNLR at 44.4, down 4.9% from the same month last year. Vancouver was in second with 45.5, down 19.8% from last year. Calgary followed with 46.5, down 7.9% from last year. Toronto wasn’t a bottom three, but it was in fourth with 49.9, down 2.2% from last year. By this measure, no market has yet to hit a buyer’s market, although Vancouver has by another measure.

Montreal and Ottawa Real Estate Led In Growth

Canadian real estate markets showing the biggest SNLR growth were Montreal, Ottawa, and Quebec City. Montreal saw the most growth with its SNLR hitting 69.6 in December, up 7.2% from last year. Ottawa followed with a ratio of 69.7, up 5.6% from last year. Quebec City saw the third highest growth with an SNLR of 52, up just 0.1% from last year. Yes, virtually flat growth represented the third highest growth in the country on this indicator.

Sales To New Listings Ratio Change – December 2018

The percent change of sales to new listings ratio in Canadian markets with more than 400 sales in December 2017.

Source: CREA, Better Dwelling.

Most major Canadian real estate markets saw declines in SNLR, but British Columbia led the way lower. Fraser Valley showed the biggest drop with a SNLR of 50.7 in December, a 21% decline from last year. Vancouver was in second with a SNLR of 45.5, down 19.8% from last year. Victoria in third with 61.3, down 13.3% from last year.

Regional weakness seems to be the narrative, but as we can see the trend extends into almost all Canadian markets. BC markets are dropping at a much faster rate than the rest of the country. However, it did have a lot further to fall.

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15 Comments

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  • Ian 5 months ago

    Toronto usually thinks it’s special for a good 6 months before falling like Vancouver.

    • Bluetheimpala 5 months ago

      Money contracts around the center and Vancouver/BC is the center of nothing. It started out west and it will end there. While Ontario will continue to correct it is a shiiiittt slurry out in Surrey, time to ‘bendouver’ vancouver…insert something that rhymes with Victoria. Tock. BD4L.

  • Ethan Wu 5 months ago

    But Canada has unprecedented growth, due to its position to capitalize on the global economist expansion. Oh, the global economic expansion is over? Well that was fast.

    “IMF says the global economic expansion is losing momentum as it cuts growth forecasts”

    https://www.cnbc.com/2019/01/21/imf–cuts-global-growth-outlook-2019-2020.html

    • Francois Penn 5 months ago

      Canadian fin-talk is so far behind the global curve. Sometimes I wonder if our bank economists are still wearing Jordache jeans, because they think it’s a hot new trend.

      • Bluetheimpala 5 months ago

        Jordache jeans..hilarious…a bit of pee came out…this.is.awesome. Tock. BD4L.

  • look out below 5 months ago

    What until you see January’s numbers….

    • Ak 5 months ago

      Do you have any insights? Asking to satisfy my curiosity .

      Thanks!

      • RyanL 5 months ago

        Check out zolo, they have trailing 1 month sales updated daily.

  • Beh G. 5 months ago

    $hit hasn’t even hit the fan yet… If you didn’t read this article on BNN yesterday, it’s definitely worth a read. According to a new survey by Ipsos on behalf of MNP, 46% of Canadians are on the brink of insolvency!

    You think that’s scary? That number was at 40% just in September of last year which means in just a little over 3 months, the situation has deteriorated that much. Sadly, this isn’t going to have a happy ending for anyone as a national recession is almost a certainly at this point:

    https://www.bnnbloomberg.ca/46-of-canadians-on-the-brink-of-insolvency-as-rates-rise-survey-1.1201156

  • Rana 5 months ago

    Re is rebounding will shoot up in summer

    • Raging Ranter 5 months ago

      You mean unemployed RE agents will be shooting up in back alleys by this summer.

    • RM 5 months ago

      Thanks for that insightful analysis.

  • Gregory 5 months ago

    I hope you are right — sold my Toronto Downtown Condo in October and I’m now renting… prices better not got up.

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