Recent data from the Canadian Real Estate Association (CREA) revealed that national home sales fell 40% y-o-y, while new listings were down at a similar rate (38%) annually.
These numbers suggest that the COVID pandemic continues to impact Canada's real estate markets after enforced public health and safety measures shuttered most of the country in March. In turn, many home buyers and sellers have chosen to remain on the sidelines until they felt more confident about how the pandemic would impact their home search or sale.
To get a better understanding of how supply and demand are panning out across the country, Zoocasa used official monthly data from CREA to review sales declines compared to declines in new listings by calculating the sales-to-new-listings ratio (SNLR) for 20 major real estate markets across Canada.
As explained by Zoocasa, the SNLR is calculated by dividing the number of sales by the number of new listings for a given period. A figure under 40% means few homes sold compared to the number that were listed during that period (a buyer’s market), while a figure over 60% means many homes were sold compared to the number listed during that time (a sellers’ market). A figure between 40% and 60% indicates that demand and supply was balanced during the period covered.
And yet despite the significant decline in the volume of sales transactions in May, Zoocasa's findings revealed that housing market competition conditions across Canada remain similar to one year ago.
At a national level, similar to 2019, Canada's housing market remains in balanced territory with an SNLR of 55%, with 33,051 homes sold across Canada in May and 59,977 homes newly listed for sale. In May 2019, there were 54,874 sales and 96,830 new listings across Canada and the SNLR for the national housing market was 57%.
Of the 20 markets analyzed, eight exhibit balanced market conditions, meaning demand and supply are in sync. This includes two of Canada's largest real estate markets, Toronto and Vancouver.
In the Toronto area, home sales dropped a whopping 54% y-o-y to 4,606, and new listings declined 53% with 9,104 homes being listed. According to Zoocasa, given the similar rate of decline in sales and new listings, buyers and sellers that were active in the market during May experienced close levels of competition as those in 2019. This is known by the SNLR for the Toronto area in May, which was 51% compared to an SNLR of 52% in May last year.
Just two markets, Edmonton and the Fraser Valley, displayed competitive conditions that are favourable for buyers. In Edmonton, sales fell 40% y-o-y to 1,320 and new listings declined 21% to 3,514, resulting in an SNLR of 38%. This figure shows a decline in conditions last May when the Edmonton housing market was comfortably balanced with an SNLR of 49%.
Similarly, the SNLR in Fraser Valley dropped from 44% last year to 38% this year, suggesting a similar shift from balanced to buyer’s market conditions in that region. However, compared to Edmonton, there was a greater drop in sales (47%), with just 766 homes changing hands in Fraser Valley during May, and a 37% decline in new listings to 2,034.
What's more, exactly half the markets included in Zoocasa's review exhibited conditions favouring sellers, with Quebec CMA and Ottawa recognized as the top two markets where buyers faced the most competition in May. Quebec CMA had a SNLR of 93% compared to 71% in 2019. Canada's capital, on the other hand, had an SNLR of 81% last month compared to 75% during the same period in 2019.
You can take a look at how the rest of the markets performed below.
As each province continues to reopen and COVID restrictions scale back, market activity will begin to heat up again, so this information may be helpful for buyers so they can have a better understanding of how competitive housing activity is where they are looking to buy.