Canadian Real Estate Prices See Further Slowing, As Demand Falls Faster Than Supply

Canada’s red hot real estate market continued to cool, according to new numbers from the industry. Canadian Real Estate Association (CREA) data shows the seasonally adjusted sales to new listings ratio (SNLR) fell in August. The relative measure of demand is one of the core indicators used to determine how tight the market is. Since peaking earlier this year, demand has eased allowing supply to rise towards healthier levels. As the situation improves, the market is naturally seeing annual price growth slow.

Canadian Price Growth Slows, As Demand Pressures Ease

Supply pressures further eased at the national level, as the sales to new listings ratio (SNLR) fell further. The seasonally adjusted SNLR was 72.4% in August, down from 73.6% the month before. It’s a tight market in the grand scheme of things, but there certainly is a lot less pressure on inventory than there was at the beginning of the year. 

Canadian Real Estate Demand and Price Growth

The sales to new listings ratio (SNLR) compared to the annual rate of benchmark price growth, for composite homes across Canada.

Source: CREA; Better Dwelling.

The annual rate of growth for the benchmark price continues to taper, responding to the prior easing of inventory. Seasonally adjusted prices are up 21.3% in August, shaving more than a point off of the 22.4% a month before. Yeah, home prices across the country are generally up more than a fifth from last year. Not exactly hurting if you bought last year, but a slowing of price growth is likely to ease the FOMO pressure buyers feel. 

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Toronto Real Estate Has Seen Annual Price Growth Slow

Greater Toronto real estate wasn’t immune to the demand ease, and is better supplied than most of Canada. The seasonally adjusted SNLR was 70.0% in August, down from 70.7% a month before. It’s still a tight market, but almost 15 points below the peak seen earlier this year. On a relative basis, buyers in the market today are seeing the market cool. 

Toronto Real Estate Demand and Price Growth

The sales to new listings ratio (SNLR) compared to the annual rate of benchmark price growth, for composite homes across Greater Toronto.

Source: CREA; Better Dwelling.

Greater Toronto real estate responded to the easing demand with slower annual price growth. Annual growth of the seasonally adjusted composite benchmark was 17.3% in August, down from 18.1% a month before. Monthly gains are about two-thirds what they were last year at this time. Still a very large number, but things are beginning to taper. 

Vancouver Real Estate Is Almost A “Balanced” Market

Greater Vancouver real estate is cooling down faster than the national average, and nearly balanced, apparently. The seasonally adjusted SNLR was 64.9% in August, down from 73.5% the year before. It’s an unusually large jump, but it appears demand cooled much faster than it usually does at this time of year in Greater Vancouver.

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Vancouver Real Estate Demand and Price Growth

The sales to new listings ratio (SNLR) compared to the annual rate of benchmark price growth, for composite homes across Greater Vancouver.

Source: CREA; Better Dwelling.

Greater Vancouver real estate prices are slowing in growth as a result of the improved supply balance. Annual growth of the composite benchmark fell to 13.3% in August, down from 14.0% the month before. Not a panic-inducing drop, but price growth is definitely easing as supply improves. 

Canadian real estate supply issues are easing, relative to qualified demand. This is helping to cool home price gains, which is a healthy sign of market exuberance easing. Annual growth is still very large though, so it would be a stretch to conclude people are already acting rationally. If annual price growth doesn’t get close to zero (or negative), it would be the first time buyer exuberance hasn’t eased after such a large drop in relative demand

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