As the impact of two summer interest rate hikes reverberate through the Canadian housing market, a discernible shift in housing price growth is evident nationwide.
With sales moderating and supply gradually recovering, prospective home buyers might soon find themselves benefiting from a larger inventory pool.
In a recent in-depth study conducted by Zoocasa, market competition across 34 cities and regions in Ontario was meticulously examined. By comparing July sales data with new listing statistics for each locality, Zoocasa identified key market trends and unveiled the varying degrees of competitiveness in the province's real estate sector.
The pivotal metric employed for this analysis was the sales-to-new-listings ratio (SNLR), which succinctly captures the interplay between demand and supply dynamics within each area.
The SNLR is categorized into three ranges, each with distinct implications for buyers and sellers:
- SNLR under 40%: A buyer’s market, where inventory surpasses demand, granting buyers more options.
- SNLR between 40% and 60%: A balanced market, signifying equilibrium between supply and demand.
- SNLR over 60%: A seller’s market, wherein demand outstrips supply, offering advantages to sellers.
Achieving Equilibrium Amidst Slower Summer Momentum
According to the findings, 23 of the analyzed markets are in a state of balance. While inventory remains tight in many of these locales, the demand and supply are relatively balanced. This balance, however, does not account for potential buyers who are currently undecided.
Several markets, previously favourable to sellers, have undergone a transformation, with North Bay witnessing the most pronounced shift. Transitioning from a seller's market at 73% SNLR to a balanced state at 57%, North Bay's shift is attributed to a substantial 31.6% increase in listed homes compared to the previous July.
Other markets that have transitioned from favouring sellers to achieving a more balanced state include Oakville, Newmarket, Toronto, Mississauga, Pickering, and Oshawa. With the exception of Mississauga, these Greater Toronto Area (GTA) markets have experienced a decline in prices over the past month. The impact of recent interest rate hikes is discernible, resulting in the decline of SNLR across these markets.
A Promising Outlook for Home Buyers
While the winds of change hint at a more favourable landscape for potential buyers in the foreseeable future, a sole market in Ontario currently caters to those in pursuit of an affordable abode. Niagara Falls emerges as a beacon of affordability, with an SNLR of just 39%. The region boasts a healthy influx of homes onto the market, quenching demand, and offers an average price of $662,200—a comparably affordable option for prospective homeowners.
Seller's Advantage Endures in Select Markets
Amid the shifting market conditions, certain locales continue to favour sellers due to the persistent disparity between demand and availability. Notably, Sault Ste. Marie, Thunder Bay, and Sudbury stand as prime examples of such markets.
With home prices below the national average of $668,754, these cities—particularly Sudbury with an average home price of $473,235—garner demand even in the face of interest rate hikes and higher mortgage costs. SNLRs of 63% for Sault Ste. Marie, 71% for Thunder Bay, and 69% for Sudbury highlight the continued seller-friendly atmosphere in these markets.
Balancing Acts and Seller's Strongholds
As the Ontario real estate landscape shifts, the dichotomy between buyer's and seller's markets becomes increasingly pronounced. On one hand, Markham, Aurora, Burlington, Whitby, and Ajax remain strongholds for sellers, with homes priced at or above $1,000,000. Although these cities have witnessed declines in both prices and sales, the reduced supply of listed homes bolsters the seller-friendly climate that persists in these markets.
The ever-evolving real estate market in Ontario is a testament to the intricate dance between supply and demand. With shifting dynamics, buyers and sellers must navigate an evolving landscape where opportunities and challenges intertwine.
Zoocasa's comprehensive analysis sheds light on these nuances, equipping market participants with insights crucial for making informed decisions.
