The Canadian real estate market has been very tight in terms of supply, but that’s beginning to change. The sales to new listings ratio (SNLR) made a sharp decline in April, according to data from the Canadian Real Estate Association (CREA). Declines were seen at both the national level, as well as the majority of major markets. For the past few months, the number of buyers has dropped much faster than sellers.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is the number of home sales compared to new listings. It’s one way to gauge the strength of supply and tells us how quickly inventory is being replaced. Better-supplied markets, where inventory grows much faster than buyers, often see prices fall. Likewise, a tight market with few sellers and many buyers will see prices rise.
The SNLR isn’t an exact science, but there are some guidelines to help interpret the levels. If the ratio is between 40% and 60%, the market is balanced and prices are right for the level of demand. If the ratio is above 60%, it’s a sellers’ market where prices are expected to rise. If the SNLR falls below 40%, it’s a buyers’ market where prices are expected to fall.
Canada Is Seeing Homebuyers Drop Faster Than Home Sellers
New resale inventory is coming in much faster than sales over the past few months. The SNLR fell to a seasonally adjusted 75.2% in April, down 6.1 points from the previous month. This is a very sharp decline from the 90.87% seen in January. It’s still a very high rate but is dropping very quickly — with only 9 major markets seeing the SNLR rise.
Toronto & Hamilton are Both Seeing Buyers Fall Faster Than Sellers
Toronto and Hamilton residential real estate both saw sharp SNLR declines. Toronto’s SNLR fell to 65.9% in April, down 6.2 points from the month before. The ratio for the region is now the third-lowest of Canada’s major real estate markets. Hamilton dipped with an SNLR of 72.5%, down 15.8 points from a month before. These markets have seen prices soar, so buyers were probably hoping for this bucket of ice water.
Niagara Real Estate has always been reactionaly to markets in the GTA and Hamilton. Looking to keep a closer eye on this trend, contact us for more market updates
