Canadian real estate markets are cooling, especially in Western Canada. Canadian Real Estate Association (CREA) numbers show the SNLR fell across Canada. The indicator, used to gauge demand by the industry, increased in just 3 major real estate markets – all in Eastern Canada. Markets in Western Canada led the index lower, while Toronto chilled in the middle of the index.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) measures the absorption of homes for sale. The ratio is pretty simple, it’s just the number of sales in a month, compared to the number of new listings. The measure is how CREA determines if a market is slanted towards buyers, sellers, or balanced.

Boring, you just want to know how to read it – we know. If the ratio is below 40, the market is a “buyer’s market.” That means prices are likely to fall, and buyers can ask for more concessions. When the ratio is above 60, it’s a “seller’s market. That’s when prices rise, and buyers do stupid things like skip inspections. Anything between 40 and 60 is considered balanced. It’s not foolproof, and the biggest, most obvious, issue is with fast moving SNLRs. If it’s dropping quickly, the print may not drop fast enough to reflect true demand measures. Ditto if it rises quickly. That said, let’s go to the numbers.

Major Real Estate Markets East Of Toronto Are Getting Warmer

The markets with the biggest jumps in SNLR are Montreal, Ottawa, and Quebec – in that order. The SNLR in Montreal reached 69.3 in November, up 12.14% from last year. Ottawa reached 69.6, up 8.92% from last year. Quebec City is third with an SNLR of 52, up 0.19% from last year. That’s it. Only three markets grew.

Sales To New Listings Ratio – November 2018

The sales to new listings ratio in Canadian markets with more than 500 sales in November 2017.

Source: CREA, Better Dwelling.

The Fastest Cooling Markets Are In British Columbia, Alberta

The fastest cooling markets are in Western Canada, including all of BC’s large markets. Vancouver’s SNLR fell to 46.8 in November, down 28.44% from last year – the largest drop in the country. Fraser Valley followed with a ratio of 52, down 27.27% from last year. Calgary came in third with a SNLR of 47, down 13.6% from last year. In fourth is Victoria at 61.9, down 13.35% from last year. Toronto is in the middle of the list, with a ratio of 49.9, down 5.67% from last year.

Sales To New Listings Ratio Change – November 2018

The percent change of sales to new listings ratio in Canadian markets with more than 500 sales in November 2017.

Source: CREA, Better Dwelling.

Slowing growth across the country indicates macro issues are at play. Throttle credit growth, higher interest rates, and mountains of debt have Canadian tapped. The buying slowed in almost all regions, except for 3 markets that underperformed. The industry doesn’t expect this to change course by much in the future either.