The mighty SALR: Your statistical friend in a sellers’ market

It’s a tough job and tag you’re it. A REALTOR®’s duty is to guide, advise and protect – fill the GAP, if you will – for your clients, no matter what kind of market.

And no one is more aware than Fraser Valley members, that our market currently – and continuously for the last eight months – has been in sellers’ market territory. Meaning, that the market conditions favour sellers.

As Board President Chris Shields highlights in this month’s ‘Eye on the Market‘ video, demand is high. Supply is low. Average days on market in January was only 28 to 37 days for our three main residential property types.

In addition, in our January monthly Member Market Poll (thank you to those who participate – every response helps!), 100 per cent of respondents reported an increase in multiple offer situations.  

All classic signs of houses flying off the proverbial shelves. And the need for Realtors to put on their ‘educator’ hats to manage their clients’ expectations.

Most Realtors will tell you that they don’t like any market extreme – balanced is the preferred state. To serve and protect clients in a sellers’ market, you must work harder, faster, be exceptionally knowledgeable, and a shrewd negotiator. And possibly be a counsellor to help buyers through the disappointments of listings selling in a heartbeat, unaccepted offers, or just no new inventory.

Sustained sellers’ markets are rare in the Fraser Valley

In the last 30 years, there have only been four other intense periods like what members are experiencing now – when we’ve had sustained sellers’ markets; sales-to-active listings ratios (SALR – more on that coming, stay tuned) notably higher than 20 per cent for multiple months in a row – and they were in 1992, 2005, 2016 and 2017.

From January 2016 to December 2017, the sales-to-active ratios for all property types – and that’s residential and commercial combined, everything that sold on our Board’s MLS® – never dropped below 20 per cent for 24 months!

How does that compare to our year of the pandemic? In 2020, we saw ten months of sales-to-active listing ratios of 19 per cent or higher – the only two extremely quiet months were during the full lockdown in April and May. The ratio peaked in December at a whopping 53 per cent. 

But what does that mean exactly? Your clients may ask you, “What is the sales-to-active ratio and why does it matter to me?”

One-stop ‘statistical’ shopping: the SALR is all you need

As we explained in an SALR primer last year, the sales-to-active-listings ratio is one, clean, simple statistic that indicates the direction of the market. You have a few in your arsenal: Days on Market (DOM); Months of Inventory (MOI); and the SALR. We’ll tackle it first, arguably the most useful, and, in an upcoming edition of NewsReal, we’ll expound on the merits of DOM and MOI, both also very handy.

It goes without saying that nothing beats a Realtor’s local knowledge and experience, but MLS® data, which is what feeds the DOM, MOI and SALR, helps to support your intuition because it is the most accurate, comprehensive, and respected housing data in Canada.

So, the mighty SALR, sometimes called list-to-sale ratio or sales-to-actives, is a single number that simply tells you if the market is favouring buyers, sellers, or is balanced.

It’s a percentage comparing the number of sales with the number of properties that were available to purchase (actives). You can figure it out manually by dividing the number of sales by the number of actives and then multiply that number by 100.

So, in January, FVREB’s total sales (residential and commercial combined) were 1,718 ÷ 4,210 active listings = 0.408 X 100 = 40.8 per cent (in our January 2021 Stats Package SALR graph, we rounded that up to 41 per cent.)

This means that for every 100 properties that were on the market, 41 were selling. So, almost half the stock (and in December it was over half) was flying off the shelves.

Tell your clients what the SALR ranges are; and then what the ratio is for their property type/sub-area

The most important piece of information to share with your clients is what the industry ranges are. According to BCREA, for the Lower Mainland, an SALR higher than 20 per cent indicates a sellers’ market, under 12 per cent a buyers’ market, and in between –- 12-20 per cent – is considered a balanced market.

In January 2021, the SALR for Board-wide single-family detached was 56 per cent; for townhomes 67 per cent; and for apartments 29 per cent.

For detached in Cloverdale, it was 82 per cent; Abbotsford detached 76 per cent; townhomes in South Surrey/White Rock 92 per cent; apartments in Mission 88 per cent (full disclosure: only seven sales compared to eight active listings.) You get the drift. The SALR changes for each property type, area, and sub-area.

Not all SALRs are high currently. Depending on the property type, markets for some FVREB areas are balanced, others are favouring buyers, which could come as a surprise to clients who only hear our regional numbers on the news. Again, real estate is local, which is why they need you. The SALR in January for House with Acreage in a couple of our communities was 9- 11 per cent. Apartment sales in many communities are steady, but not a sellers’ market.

KEY TO NOTE: This answers a question the Board receives quite often from members re: the SALR. The ratio compares the total number of sales accumulated over a one month period to the number of actives taken at an exact moment on the last day of the month; a ‘snapshot’ in time if you will. So, the number of actives in the SALR is not the total number of listings that were active at some point in time during the entire month. The SALR industry standard is to compare the total volume of sales in a timeframe with the number of actives grabbed at a specific, consistent point during that same timeframe.     

Where do I find the SALR?

As mentioned above, you can manually calculate it if you know the number of sales and number of actives. 

You can look at it for Board, area, or sub-area via our FVREB Stats Centre. You can also find it in our raw stats report, the C Report by Area, which is posted on our FVREB stats pages on REALTOR Link®. It doesn’t contain the SALR by sub-area, only for Board and area under the column entitled: #S/#A%, second in from the right.

And if it’s a few days after month-end, or later in the month and you’re using the Stats Centre, remember, the number of active listings is fluid, it changes literally by the minute as listings come and go, so your SALR will not match perfectly with what we published at month-end. For example, on the last day of January, the ratio for FVREB detached was 56 per cent; on February 9 it was 50 per cent. No matter how you slice it – a sellers’ market. The exact number is less important than the range it falls into – your client just needs to know buyers,’ sellers,’ or balanced and the implications of either one.

The only time you’ll see a wild SALR swing in a short period is if there is an unexpected shock to the market – as in, the lockdown in 2020. However, that is exceedingly rare, and you, if need be, would be able to explain that to your client.

Need any help finding the SALR? Feel free to contact our or 604.930.7626. Or email our ‘Sexy Stats’ gal!

Source: FVREB Communications