Recycled Listings Skewing Canadian Real Estate Data
Canada’s red-hot real estate market has long been a source of fascination and frustration. But could the numbers we’re seeing be misleading? “Re-listing”, a common practice among real estate agents, distorts vital metrics like average days on the market and new listings, painting a skewed picture of the city’s housing landscape.
Recycling a listing occurs when a property is removed from the market, only to be re-listed shortly after with little to no changes. In some markets, like Toronto, the practice has become more popular. There are good reasons why agents and sellers do this:
The sellers don’t want viewings while they are on holiday.
The Sellers are switching agents, and listings are linked to agents.
The home was listed at a price that didn’t catch anyone’s attention, so they re-list it at a lower price.
Buyer agents sometimes filter for recent listings to see if there’s something new to show their clients. Seller agents re-list so their old listing will appear in the buyer agent’s search.
Monthly Re-listings as a Share of Total New Listings
Toronto — Record Number of Cancelled Condo Listings
While it might seem harmless, it significantly impacts the data used to analyze market trends.
Our analysis shows that, on average, 50 per cent of Toronto detached house listings are dropped (expired or cancelled) every month. Many of them are re-listed; perhaps some are not re-listed quickly enough to be considered a re-listing in the eyes of the real estate board.
Depressed Average Days on the Market
Average days on the market (ADOM) — a key indicator of market activity — are also skewed. By re-listing a property, agents can effectively reset the clock, making it appear that homes sell faster than they are.
This can create a false sense of urgency for buyers, pushing them to make hasty decisions. Sellers, on the other hand, might overprice their homes based on inaccurate market data.
Making the market look hotter than it is, leads sellers to list at higher prices than the market will bear. The home doesn't sell, so the agent proposes re-listing it at a lower price. There is an irony that re-listing skews the statistics in a way that leads to more re-listing.
Average days on the market are the more straightforward market metric for buyers and sellers to understand, and we believe they are relied on more than other metrics.
Metro Toronto
In May 2024, the average days on the market for a detached house in Metro Toronto was 16 days. This key market indicator signals to buyers that houses are selling quickly, that they should rush to view and make an offer if they like a home, and that they have very little power to negotiate.
However, if the average property is re-listed twice before a sale, the adjusted average days on the market is 30 to 45 days.
If you divide the total active listings by the number of monthly purchases, you have a ratio called months of inventory. Essentially, this is how many months it should take to sell all the properties for sale if purchases continue at the current pace. In Metro Toronto, the months of inventory for detached houses was 2.8 months in May 2024 or roughly 84 days.
This implies that detached houses are re-listed five times before they find a buyer.
Metro Vancouver
In May 2024, the average number of days on the market for detached houses in Vancouver was 26. In the same month, roughly six months of inventory were listed for sale, or roughly 180 days.
This implies that detached houses in Vancouver are re-listed 7 times before they find a buyer.
Metro Calgary
In May 2024, the average number of days on the market for detached houses in Calgary was 18. In the same month, roughly one month's inventory was listed for sale, or roughly 30 days.
This implies that detached houses in Calgary are re-listed 1.6 times before they find a buyer.
It is clear that re-listing is less common in Calgary, Vancouver is somewhere in the middle, and in Toronto, re-listing is common practice.
Inflated New Listings
The sales-to-new-listings ratio uses new listings. Economists and industry analysts use this ratio to determine whether the market is balanced, favours buyers, or favours sellers.
When a property is re-listed, it's often counted as a new listing, even if it's the same house that was just on the market. This can give the impression of a plentiful supply of homes, while in reality, inventory might be tight. It creates a distorted view of the market that can lead to bad decisions for financial institution leaders, government policymakers, buyers, and sellers alike.
These institutions are making major strategic decisions and steering market participants based on erroneous data.
RBC — Toronto Region Sales-to-new-listings Ratio
RBC Royal Bank uses this ratio in its monthly market reporting covering Toronto, Montreal, Vancouver and Calgary.
The Bank of Canada examined this ratio in their Indicators of Financial Vulnerabilities report.
Bank of Canada — Sales-to-new-listings for Canada
Different Regional Practices
The Bank of Canada was looking at national Canadian sales-to-new listings. The problem is that different regions have varying practices regarding recycling listings; this means that larger markets like Toronto, where new listings are most inflated, have an outsized influence on the economic analysis of the national housing market.
Also, when property investors decide where to invest in a rental property, the varying practices make it difficult to draw meaningful comparisons between Canadian cities.
Possible Solutions
While there’s no easy solution to this issue, greater transparency from real estate agents and stricter data collection standards are essential.
The Canadian Real Estate Association could set well-defined and enforced standards for when re-listing is appropriate. These would be adopted by the many local real estate boards.
Real estate boards could be required to adjust the published average days on the market and new listings to account for re-listings. Subtract re-listings from the new listings and calculate days on the market using the original listing date rather than the most recent listing.
Real estate boards could be required to publish any re-listings and how they are defined. e.g., any re-listing within three months of the original listing.
“We need to find ways to identify and adjust for recycled listings in our market data,” says David Stroud the Founder of Properi Edge. “Otherwise, we’re operating in the dark.”
The Takeaway
Particularly in a volatile market where homeownership has been politicised, it is distressing to know that real estate boards publish misleading statistics that lead to conflicting interpretations of market conditions.
How can policymakers, buyers, and sellers find common ground and alignment when Canadians can’t agree on the facts reported in the news? The public must have accurate and reliable data to draw insights and inform decisions.
Addressing the issue of recycled listings will give us a clearer picture of what’s happening in our housing market.
