Canadian Real Estate Association: Housing Demand Nosedives in Canada’s Major Cities
By James Weston @ Real Estate Daily
April 10, 2018

Sales-to-new listings ratio is one tool used to measure demand in the housing market. According to the Canadian Real Estate Association this ratio has been dropping in over half of Canada’s major cities. The largest drops in sales-to-new listings were in Greater Toronto, Hamilton, and Niagara. In Greater Toronto, which had the largest drop, the ratio fell by 26.2% from last year.

However, cities like Ottawa, Montreal, and Gatineau have experienced increases in the sales-to-new listings ratio. The greatest ratio increase was in Ottawa, where the ratio jumped up by 12.10% from last year.  Despite the fluctuations in this ratio, nearly all of the major cities in Canada are currently “seller’s markets”.

Key Takeaways

  • The sales-to-new listings ratios have dropped in more than half of Canada’s housing markets.
  • Sudden changes in this ratio could lead to over reactions such as significant spikes or drops in asking prices.
  • Even though there is concern that Canada’s sales are cooling, the majority of its major cities are “seller’s markets”.

Excerpt

There’s a lot less pressure on prices in Canada’s largest real estate markets. Canadian Real Estate Association (CREA) numbers show that 60% of markets saw declines in sales-to-new listings ratios. The ratio, which is used as a relative measure of demand, is declining in the country’s most expensive markets. Meanwhile, markets that underperformed the national average, are starting to see (minor) improvements.

Sales-To-New Listings As A Measure Of Demand

The sales-to-new listings ratio is one of the methods used to determine if it’s a buyer’s or seller’s market. The closer the ratio is to 50%, the closer it is to balanced. A higher ratio means the market is moving into seller’s territory, which allows sellers to ask for more. A lower ratio means the market is in buyer’s territory. This means buyers can typically demand lower prices, or more concessions from the seller. There’s a few notes to keep in mind when using this indicator.

Largest Changes To Sales-To-New Listings Ratio

The largest increase in sales-to-new listings ratios were in Ottawa, Montreal, and Gatineau. Ottawa saw the ratio climb to 65.5%, a 12.10% increase compared to last year. Montreal followed with a ratio of 64.5%, a 7.8% increase compared to last year. Gatineau came in third with a ratio of 53%, a 7% increase from last year. Worth mentioning that these markets all underperformed the national price average last year.

View the original article at Better Dwelling