Canadian real estate markets are seeing demand improvements, just not in British Columbia. Canadian Real Estate Association (CREA) data shows the sales to new listings ratio (SNLR) increased in August. The ratio, which gives a quick snapshot on how soft the market is, generally increased. British Columbian real estate was a notable exception. Cities in the province were the three fastest cooling markets in the country.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is one of the measures the industry uses to gauge demand. The ratio is exactly what it sounds like – the ratio of home sales, to the number of new listings for homes. It’s one of the measures of absorption the industry uses, to understand replenishment. It’s straight forward – the higher the ratio, the slower inventory replenishment. This generally leads to higher prices. The lower the ratio, the longer it’ll take to absorb the inventory. This generally leads to lower prices.
There’s a few key points the industry likes to watch, and even gives cute names to. When the ratio is above 60%, the market is a seller’s market – where prices are expected to rise. Below 40% and the market is a buyer’s market – where prices are expected fall. Between 40% and 60%, the market is considered balanced, and prices are just right. Of course, some markets a more sensitive to ratio than others, and it’s just a guideline. Obviously, use multiple data points before trying to gauge where the market is going to head.
Eastern Canadian Real Estate Is Seeing The Biggest Increases
Eastern Canadian real estate markets made the biggest jumps in SNLR. Gatineau made the biggest climb with its SNLR reaching 66.7% in August, up 11% from last year. Halifax was in second with the ratio hitting 72.5%, up 9.1% from last year. Montreal was the third fastest growing major market at 74.8%, up 7.4% from last year. Most of these markets experienced very low price growth over the past few years. Even with Montreal’s high SNLR, price growth over the past 5 years is half of what Toronto and Vancouver have seen.
Sales To New Listings Ratio
The sales to new listings ratio in Canada’s largest residential real estate markets.
Source: CREA, Better Dwelling.
B.C. Real Estate Leads The Market Lower… Again
B.C. real estate markets are once again leading lower, after taking a break for most of the summer. Vancouver made the largest decline with an SNLR of 40.5% in August, down 12.3% from last year. Fraser Valley came in second with a ratio of 46.6%, down 12% from last year. Victoria did a little better with a ratio of 58.1%, down 6.7% from last year. A little surprising, considering cities like Vancouver saw a big jump in sales last month. However, it also saw a big jump in inventory for the month as well.
Sales To New Listings Ratio Change
The percent change in sales to new listings ratio in Canada’s largest residential real estate markets.
Source: CREA, Better Dwelling.
Toronto real estate didn’t fit in either extremes, but did outperform national growth. The ratio for Toronto reached 53.7% in August, up 4.6% from last year. To contrast, the national aggregate hit 56.6, up 0.7% from last year. The market in Toronto is a little more loose than the national number, but it’s growing faster.
Overall, Canadian real estate markets are seeing demand improve, compared to last year. Eastern Canada saw the biggest boost, after underperforming for years. B.C., which led price growth over the past few years, is predictably finding a better balance.
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