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Every Major Canadian Real Estate Market West of Ottawa Is Cooling Down

Canadian real estate markets continued to cool across the country. Canadian Real Estate Association (CREA) numbers show the sales to new listing ratio dropped in every major market west of Ottawa. That’s right, only four markets saw improvements last month.

Sales To New Listings (SNLR)

The sales to new listings ratio (SNLR) is the indicator CREA uses to come up with those buyer’s or seller’s market labels. When the ratio is between 40 to 60 percent, the market is balanced. When the ratio is above 60, it’s considered a seller’s market. That’s when sellers get to call the shots, demanding higher prices or concessions from buyers. When the ratio is below 40, it’s considered a buyer’s market. That’s when a buyer gets make demands like lower prices. It’s pretty straightforward, but there’s some things you should keep in mine.

The biggest thing to note is the labels don’t apply to fast moving markets. If the SNLR is making a fast decline from a high ratio, it could just be passing through balanced territory. The result is it would feel like a buyer’s market, even though it reads seller’s. Same with the a fast rising buyer’s market, which could feel like a seller’s market. Like with most indicators, you shouldn’t depend on a single data point. Instead, let it be your starting point for market research.

Every Major Market West of Ottawa Is Lower

The SNLR only increases in four markets, and none are west of Ottawa. Montreal’s SNLR rose to 66.4 in June, up 12.16% from last year. Halifax rose to 61.4, a 10.23% increase. Ottawa’s ratio increased to 67, a 10.02% increase. Quebec City hit 51.5, less than a percent higher than last year. These markets are improving, but none of them are anywhere close to last year’s hot markets.

Sales To New Listings Ratio – June 2018

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

Southern Ontario Is Home To The Biggest Declines

The fastest falling ratios are in the “Golden Horseshoe” region of Southern Ontario. The Niagara region had a SNLR of 61.4 in June, down 25.93% from last year. Toronto had the second biggest decline with an SNLR of 48, down 24.53%. Hamilton came in at 61.5, a 20.44% decline from last year. All of these markets are in the same economic region, which could compound issues.

Sales To New Listings Ratio Change

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

Source: CREA, Better Dwelling.
Local policy measures are likely playing a smaller role than people think. Yes, non-resident and anti-speculation taxes have deterred buyers in a few markets. A national slowdown however, means a things like higher interest rates may be taking its toll. Rates have only made a mild move higher, and they’ve already shaved off up to 6% of buying power from last year. That’s a big change from two years ago, when rates were stagnant for seven years.