Canada’s fast moving real estate market is still seeing demand shift to the East Coast. Canadian Real Estate Association (CREA) data shows the sales to new listings ratio improved in July. On the national level, there was only a small increase. However, that’s because large gains in the East, are being weighed down by large drops in the West.
Sales To New Listings Ratio (SNLR)
The sales to new listings ratio (SNLR) is one of the measures the real estate industry uses to gauge demand. It’s the ratio of sales in a month, expressed as a percent of new listings to hit the market. The higher the number, the stronger the rate of absorption. Markets with high rates of absorption are low on inventory for the current demand. Basically, it’s a quick way to see how supply is doing.
Once the research is done, reading the indicator is straightforward. When the SNLR is below 40 percent, it’s a buyer’s market, and prices usually fall. If the ratio is above 60 percent, it’s a seller’s market, and prices generally rise. Between 40 and 60 percent, the market is balanced, and the market is priced right for now. There’s a few caveats, but the one that stands out is change. When the ratio is fast moving, it often means the market will act like a market in the direction its heading.
Ottawa And Eastern Canadian Real Estate See Biggest Increases
Biggest increases on the SNLR were in Gatineau, Halifax, and Ottawa. Gatineau’s made the biggest increase with the SNLR reaching 65.8% in July, up 10.6% compared to last year. Halifax followed with an SNLR of 71.5%, up 8.7% from last year. Ottawa came in third with an SNLR of 74.9%, up 7.3% from last year. Over half of major real estate markets in Canada saw SNLR improvements last month.