Canadian real estate inventory is finally catching up to demand, and might actually be overshooting it in some places. Canadian Real Estate Association (CREA) numbers show November saw an increase in new listings across the country. This trend was most pronounced in Toronto, where the number sales aren’t keeping up with the new inventory. This could mean more downward pressure on prices in the country’s largest real estate market.
Toronto Leads New Listing Growth
The greatest increase of inventory was observed in Toronto, Fraser Valley, and Vancouver. Toronto saw 14,349 new listings in November, a 36.4% increase compared to last year. Fraser Valley saw 2098 new listings, a 34.7% increase compared to last year. Greater Vancouver came in third with 4217 new listings, a 31% increase compared to last year. All three of these markets were coming off of inventory lows, so the rise in inventory is somewhat expected.
Biggest Decreases Were Out East
The largest declines of inventory were observed in Trois Riveres, Saint John, and Gatineau. Trois Riveres saw 131 new listings in November, a decline of 18.1% compared to last year. Saint John saw 242 new listings, a 14.5% decrease from last year. Gatineau saw 470 new listings, a decrease of 12.6% from last year. Worth noting these three markets are relatively small, so the decrease is emphasized.
Sales To New Listings Ratio
Something we always like to remind people is inventory doesn’t matter unless compared to sales. One quick way CREA uses to gauge this is using the sales to new listings ratio. The higher the ratio, the hotter the market. The lower the ratio, the colder the market. The closer it is to 50%, the more balanced the ratio.
Some caution should be used when looking at these numbers. For example, a market with a high sales to new listings ratio may be showing a quick decline. These are sometimes colloquially referred to as a falling knife, because you don’t want to try and catch it while it drops. The opposite is often true as well. A market with a low ratio that’s climbing may be warming up. Developers and flippers might want to check these markets out for deals that could maximize profits.
London and Windsor Have The Highest Sales To New Listings Ratio
The regions with the highest sales to new listings ratios were London, Windsor, and Victoria. London and Windsor, both located in Southern Ontario, had ratios of 78.9% and 75.2% respectively. Victoria, BC came in third, with a ratio of 74.9%.
Toronto Sees Largest Decline In Sales To New Listings
The biggest declines in sales to new listings ratio were in Toronto, Niagara, and Kitchener. Toronto had a sales to new listings ratio of 52.9%, a 20% decline compared to this time last year. Niagara, which is in the same economic zone as Toronto, had a ratio of 71.5%, a 13.3% decline compared to last year. The Kitchener-Waterloo area, also in the same economic region as Toronto, had a ratio of 73.7%, a a 9.2% decline compared to last year. Since you’re probably curious, Greater Vancouver has a ratio of 65.4%, a 4.7% decline compared to last year.
Expect downward pricing pressure in Canada’s largest markets, as inventory continues to climb. Additionally, CREA anticipates national sales numbers will drop to 486,600 sales in 2018, a decline of 5.3% from last year. On the upside, inventory climbing and less sales next year is good news for buyers.
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