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The Continued Cooling of Real Estate Markets across Canada

The Continued Cooling of Real Estate Markets across Canada
4 min. read

Image: Jane Rix/Shutterstock.com

A marked decrease in demand is still being seen in major property markets across Canada. But although not all the country’s real estate may look like the best financial prospect right now—and life is clearly still tough for homebuyers here—it’s probably not a time to panic.

The Sales to New Listings Ratio

The sales to new listings ratio (SNLR) is a good metric for judging the amount of demand in a real estate market.  For any given market, it is the ratio of the number of home sales over the number of new listings—it is generally considered a sellers’ market if the ratio is above 60% and a buyers’ market if it is below 40%, with any number between those limits indicating a balanced market. Better Dwelling has used this metric to report on the cooling still being seen in many Canadian real estate markets.

Decline in Demand across Canada as a Whole

Numbers produced by the Canadian Real Estate Association (CREA) indicate that February 2019 saw a further decline in the SNLR for Canada as a whole: it was down to 46.2%, which was a decline of 14.91% from the previous month and a 2.4% decrease from the previous year.

The Sales to New
Listings Ratio
February 2019February 2019 vs
January 2019
February 2019 vs
February 2018
All Canada46.2%-14.91%-2.4%

SNLR Increases and Decreases in Major Markets

This decline was seen in several of the country’s major markets. British Columbia saw the biggest reductions, with the Vancouver real estate market’s SNLR dropping to 29.4%, which is 20% less than last year, and the Fraser Valley real estate market’s SNLR falling to  38.7%, which is a huge 24.6% drop from last year. Other cities in Canada also experienced drops, though not of the same magnitude, with, for example, the Hamilton real estate market’s SNLR falling to 54.7%, which was an 8% decrease from last year.

The SNLR of some other major cities moved in the opposite direction. For instance, in the Ottawa real estate market it increased to 61.5%, an 8.8% increase from last year, and the ratios for the Montreal real estate and Quebec City real estate markets rose to 47.7% and 55.1% respectively, representing increases from last year of 5.1% and 5.5%.

 The Sales to New
Listings Ratio
February 2019 vs
February 2018
Quebec City47.7%5.5%
Vancouver 29.4%-20%
Fraser Valley38.7%-24.6%

Of Canada’s other major real estate markets, Toronto, Edmonton, Calgary and London all experienced SNLR decreases, with Winnipeg having a slight increase.

Reasons for the Cooling

Several factors can be blamed for the current cooling of many major Canadian markets. There are the foreign buyers’ taxes which have been implemented in British Columbia and Ontario, which were widely welcomed as calming measures in overheated markets, and which partly explain why some markets in those provinces are not as active as before. Rising interest rates have also had a negative impact on the vigour of the real estate market. Then there is the mortgage stress test, which has been in place for more than a year now and was intended to guard against a potential Canadian housing bubble.

In some quarters, however, it is argued that the stress test is now doing more harm than good. In an effort to alleviate the situation and enable more people to buy homes, the Canadian government’s recent budget included measures to help first-time homebuyers. The country’s prime minister Justin Trudeau said:

“Owning a house is a big achievement. It’s where you raise a family and set down roots. But far too many young people are worried that they won’t be able to reach that dream.”


Other reports confirm the impression that real estate in Canada as a whole is not exactly hot right now, mentioning that new home prices fell year-over-year for the first time in nine years. It is also suggested that more corrections will be seen in 2019, due to the factors that weigh against the sector such as the stress test and interest rates. It seems homebuyers still won’t have an easy task in 2019, but there are signs that the authorities are aware of how they might be helped.

Regarding concerns as to whether Canadian real estate is experiencing a dangerous decline, it shouldn’t be forgotten that the SNLRs of many of the country’s major real estate markets are within the 40-60% range, indicating balanced markets. The Better Dwelling article concludes by suggesting that the market is indeed still technically ‘balanced,’ and that it awaits changes in external factors which might send it up or down.

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