Despite a sharp uptake in new listings, buyers will continue facing strong competition if they’re looking to buy in today’s market, according to the latest numbers from the Canadian Real Estate Association (CREA).
In their February 2022 release, CREA reports that new listings increased by 23.7% month-over-month. While the increase in available properties is welcome to worn out buyers, the sales-to-new-listings ratio (SNLR) remains high at 75.3%. This is the ratio that compares the number of sales in a given time to the number of new listings becoming available. A market that favours sellers is usually above 60%. February saw an improvement over the historically low SNLR of 89.4% in January 2022. For reference, the long term average of this metric is 55.1%.
Property sales rose by 4.6% over last month. While encouraging, this means properties are still available to snap up. The increase in activity is likely a result of the rebound in new listings following the 10.8% decline in January. Additionally, this strong activity may continue as listings that came on to the market in late February continue to sell into March.
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Despite this renewed activity, the SNLR does mean that market conditions still greatly favour sellers. The historically low levels of stock have carried over from last month despite the bounce in new listings, still sitting at 1.6 months of inventory, tied with January 2022 and December of last year for the lowest levels ever recorded.
The continued competitive market means the National Home Price Index Benchmark Price broke a further record this month, up 3.5% month over month and 29.2% year over year in February, bringing the average price of a home to $868,400. The actual (not seasonally adjusted) national average sale price posted a 20.6% year-over-year gain in February.
The Future is Still Competitive, but There is Room for Optimism
The bounce in new supply follows a similar trend to the previous two years. The seller’s market is expected to hang around for the near future, but there is optimism that new listing numbers will continue to rapidly improve. CREA’s senior economist, Shaun Cathcart, says:
“In the short term, expect at least one more month of stronger sales as the majority of those new listings came onto the market near the end of the month so many of the associated sales likely won’t happen until early March. Ideally, listings will continue to come out in big numbers in the months ahead. Combined with higher interest rates and higher prices, we could be at a turning point where price growth begins to slow down and inventories finally begin to recover after seven years of declines. Still, in order to turn this market back towards balance long-term, building more new homes across the spectrum remains the key.”
Price Growth Continues Across Ontario
Price gains have continued across Ontario, according to CREA’s data, with Bancroft, Brantford, Cambridge, North Bay and London & St Thomas seeing year-over-year growth of over 40%.
Here’s how five of Ontario’s major areas faired in February:
After their lowest levels in two decades, listings in Toronto have seen an improvement, with 14,147 new listings for February. Contrasting this with 9,097 sales, the SNLR now sits at 64% for the area – the best we’ve seen for buyers in months. Listings have dipped by 6.5% year over year, considerably less than sales, which has dipped by just over 17%. The benchmark price, however, has seen a 35.7% increase year over year, up to $1,333,000.
New listings in Ottawa improved by 11% on last year, with 1,821 homes hitting the market during February. Sales have also bumped over last year by 1.5%, with 1,437 compared to 1,416, leaving us with an SNLR of 77.5%. The benchmark price has risen 15.6% from last year to $718,900, which is also a 2.6% increase on January’s. If stock continues to improve, price growth in the area may start to slow down.
The region has once again broken its record for residential properties, with a new benchmark price high of $1,196,200 which is a 33% increase from February of last year. Sales are down 5.6% on last year, with 1,176 transactions completed this month. There has been an ever-so-slight improvement in stock – up 1% from last year, with 1,620 new homes on the market in February. Despite this, inventory remains remarkably low, with just 0.6 months of stock. With an SNLR of 81.7%, the area is still hugely more beneficial to sellers.
Kitchener-Waterloo is still firmly planted in a seller’s market, with an SNLR of 82.8%, a 1.9% increase from last year. New listings in the area are up 11.2% over last year, with 835 homes hitting the market in February, while there were 625 sales, a 2.1% increase in last year. The improvement in new listings has led to a very small increase in stock to 0.5 months of inventory from 0.3 in January. The benchmark price now sits at $945,100, an increase of 36.5% year over year.
London St. Thomas
As is the trend with a lot of Ontario’s most impactful areas, London St. Thomas has seen an improvement in stock, with 1,086 new listings in February, an 8.4% increase from last year, and also a record for the area. But with the inventory remaining at 0.5, it illustrates the imbalance between the demand for homes and the inventory shortage. With 875 sales last month, the SNLR for the area stands at 84.7%, a 0.2% dip year over year. The MLS HPI has seen a 41% jump from last year to a total of $735,600.