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.
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.
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.