Canadian real estate buyers are facing less inventory, and more competition. Canadian Real Estate Association (CREA) data shows the sales to new listings ratio (SNLR) increased in most markets this past January. The rising ratio, used to help understand demand, reached a “seller’s market” last month. Not just in one place either – the whole country is now a seller’s market.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is one way to gauge relative demand of inventory. Analysts use it to help determine how fast new listings are coming in to replace sold inventory. The lower the ratio, the more inventory will build. The higher the ratio, the tighter inventory is. When people talk about supply and demand, this is one of the core metrics used to understand it.
The SNLR is a straightforward read. When the SNLR rises above 60%, the market is a seller’s market – and prices should rise. When the ratio falls below 40%, the market is a buyer’s market – and prices should fall. Between 40% and 60% the market is considered balanced, and priced right for demand. Generally the ratio needs to stay in the range to see it respond in the expected manner. There’s also a few caveats, such as priced right for the market now, doesn’t mean it’ll be priced right later.
Canada Enters A National Seller’s Market
Canada entered a national seller’s market last month, after a big spike in sales. The SNLR for Canada’s urban aggregate reached 60.5% in January, up 6% from a year before. Montreal had the highest SNLR of any city at 79.8%, up 9.6% from last year. Halifax followed with an SNLR of 79%, up 14% from a year before. Ottawa came in third with an SNLR of 78.6%, up 8.4% from a year before. The national number is the highest for January in at least 3 years. The top 3 cities have also seen at least 3 consecutive increases for the month.
Sales To New Listings Ratio
The sales to new listings ratio in selected Canadian residential real estate markets.
Source: CREA, Better Dwelling.
The lowest ratios of any urban market were all located in the Prairies. Saskatoon has the lowest urban SNLR at 42.8% in January, up 2.7% from a year before. Regina follows with an SNLR of 47.7%, up 4.7% from last year. Edmonton comes in third with an SNLR of 48.7%, up 4.7% from last year. Despite having the lowest ratios, all three markets are “balanced” by this indicator. These markets also saw improvements from a year before.
Eastern Canada Is Seeing The Fastest Rise In SNLR
Eastern Canada is seeing the fastest rise in SNLR, and it’s really fast. Halifax made the biggest jump with the SNLR reaching 79% in January, up 14% from a year before. Montreal was in second with an SNLR of 79.8%, up 9.6% from a year before. Toronto came in third with an SNLR of 58.8%, up 9% from last year. All three markets are firmly above their 2018 number as well.
Sales To New Listings Ratio Change
The percent change in sales to new listings ratio selected Canadian residential real estate markets.
Source: CREA, Better Dwelling.
The only declines for SNLR were located in Southern Ontario. The Windsor-Essex region reported an SNLR of 69.8% in January, down 5.4% from a year before. London’s SNLR fell to 72.8%, down 1.9% from last year. The drops still weren’t enough to bring the markets out of seller’s territory.
Canadian real estate sales are growing faster than new inventory in all but two markets. The sudden surge in sales over the past few months, likely has to do with delayed B-20 demand. The surge in demand is removing a lot of pressure on prices to fall, which compounds inventory issues. Ironically, fewer people want to sell during a seller’s market.
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TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
