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These are Canada's eight most competitive housing markets for buyers — and they'll surprise you

18 Dec 2020

Even in a year where historical records have been broken almost daily, and “unprecedented” has become a cliche, Canada’s housing market stands out.

During the pandemic, low mortgage rates, more money in the pockets of higher earners and a desire for more living space spurred by remote working have fuelled a housing boom that has defied predictions.

Since the first burst of pent-up demand unleashed after the spring lockdown, housing market activity has remained at historically high levels.

The Canadian Real Estate Association predicts that 2020 will be a record-breaking year for housing, up more than 11% from 2019.

Though the summer boom has eased, nationally sales were up 32% in November, a new record for the month and new listings, up 15%, aren’t keeping up with demand.

In fact, Canada has become more competitive for home buyers, rather than the reverse, which might normally be expected in a severe recession, finds a new study by online realtor Zoocasa.

To understand just how competitive, Zoocasa calculated the sales-to-new-listings ratios of 25 housing markets in Canada.

Just a quick refresher, an SNLR of below 40%, where new listings are exceeding sales, is a buyer’s market, between 40% and 60% is a balanced market and above 60% is a seller’s market because demand is exceeding supply.

The study reveals that competition has increased, with the overall Canadian SNLR rising to 90% in November from 79% in 2019.

“All 25 markets included in our analysis exhibited competition conditions that strongly favoured sellers over buyers,” said Jannine Rane, author of the report.

In 2019, 19 of the 25 markets were considered seller’s markets, with the remaining six in balanced territory.

Eight regions stood out in November for an SNLR over 100%, where elevated demand and limited inventory have led to very competitive conditions.

Sudbury comes in as Canada’s most competitive market. November sales here grew 26% from the year before, and listings dropped by 10%, pushing the SNLR to 117%.

Saint John and Gatineau, both with an SNLR of 110%, were next in line. In Saint John, new listings rose 12%, but sales grew 30%. But even though these markets are among the most competitive, they are also among the most affordable, with both seeing average home prices below $350,000, says the study.

The eight most competitive markets and their SNLRs are:

  • Sudbury (117%)
  • Saint John (110%)
  • Gatineau (110%)
  • London and St. Thomas (109%)
  • Halifax-Dartmouth (108%)
  • Thunder Bay (106%)
  • Niagara Region (106%)
  • Victoria (101%)

And here’s the surprise: the two markets traditionally considered the country’s hottest were among only three regions actually less competitive for buyers. Greater Toronto, Greater Vancouver and Hamilton-Burlington all saw their SNLRs decrease in November, though they remained strong seller’s markets.

Toronto’s SNLR was 76%, down from 82% in 2019, with sales increasing 24% and new listings up 34%. The average price of a sold home was $955,615, up 13%.

In Vancouver, the SNLR was 75%, down from 83%, with the average price rising 8% to $1,084,001. Hamilton-Burlington saw just a slight decrease in SNLR, from 94% to 93%. The average home price here rose by 21% to $724,730.

Where does the housing market go from here? Predictions vary, sometimes wildly. Some forecasters expect home prices to decline in the new year as unemployment and lockdowns take a further toll on the economy. Others think low mortgage rates and demand for more space will continue to drive sales.

A key risk to the housing market is a sudden rise in bond yields, said Capital Economics in a note this week. But with the Bank of Canada likely to keep long-term yields pinned down for the next two years, even amid the stronger economic recovery Capital predicts, it forecasts home prices will continue to rise throughout 2021.

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Désirée Till

Residential Real Estate Broker

514 943-5646