More Ottawa listings quit the market in July than sold in it

The number OREB led with, and what it is made of

Ottawa's sales-to-new-listings ratio went from 48.8% in June to 52.4% in July. OREB called that improved absorption, and on the surface it is. Back in early July I told you this was the one number worth watching this summer, ahead of the average price and ahead of the sales count. So I owe you an honest read of it now that it has moved in the direction I said would be a good sign.

It moved for the wrong reason.

A ratio has two inputs. This one improved because the bottom number shrank faster than the top number did. That is not the same event as demand picking up, and if you treat it as the same event you will price your fall listing too high.

Both sides of the Ottawa market got smaller

Here is the arithmetic. July sales were 1,325, down 12.7% from June. Work backwards and June sales were about 1,518. June's ratio was 48.8%, so June new listings were about 3,110. July new listings were 2,530.

So new listings fell 18.7% month over month while sales fell 12.7%. Both sides contracted. Supply just contracted harder.

Check it: 1,325 divided by 2,530 is 52.4%, exactly what OREB published. The reconstruction holds. A ratio that improves because the denominator collapsed is a very different signal from one that improves because buyers showed up.

Roughly 1,500 listings left without selling

This is the part that changed how I read the month.

Active listings ended July at 4,678, down 6.1% from June, which puts June's active count around 4,982. Add July's 2,530 new listings and you had roughly 7,512 properties available at some point during the month. Subtract the 1,325 that sold and you would expect to finish July with about 6,187 active.

We finished with 4,678. The gap is about 1,509 listings that left the Ottawa market without a sale.

That is more properties expiring, terminating or being withdrawn than were sold. About 1.1 unsold exits for every closed deal.

Two honest caveats before anyone quotes that number at a listing appointment. Active listings is a point-in-time count, not a daily average, so the edges are fuzzy. And new listings counts re-listings, which means some of those exits are the same house leaving and coming back with a fresh number. Call the real figure somewhere in the 1,400 to 1,600 range. The direction is not in question and neither is the order of magnitude.

Nobody publishes that stat. You have to build it out of the four numbers OREB does publish, which is probably why the July coverage all read as cautiously upbeat.

Inventory fell and months of inventory still went up

Active listings dropped 6.1% in July. Months of inventory went from 3.3 to 3.5. Supply on the shelf got smaller and the time it would take to clear that shelf got longer.

There is only one way that happens. Demand shrank faster than supply did. 4,678 divided by 1,325 is 3.53 months, and 4,982 divided by 1,518 is 3.28. The math is not ambiguous.

I wrote yesterday that 3.5 months looks tight next to the national 4.8 but sits about 46% above Ottawa's own long-run July normal of 2.4. Add the exit number to that and the picture sharpens. The overhang is not just large. It is large and it is being partly cleared by sellers giving up rather than by buyers transacting.

Where the exits are concentrated

Apartments carried 5.4 months of inventory, a 41.0% sales-to-new-listings ratio and a median 41 days on market. The apartment benchmark is down 5.2% year over year. Ottawa Centre ran 5.6 months of inventory on a 39.6% ratio and sales down 8.3%. Those two overlap heavily, and both are below CREA's 40% balanced floor.

The suburbs look nothing like that. Ottawa Suburb West posted 56.2% absorption on 3.0 months of inventory, Suburb South 55.7%, Suburb East 54.3%. Single-family homes ran 3.2 months with the benchmark up 0.6% year over year, the only major segment with a positive price line.

So the citywide 52.4% is an average of a downtown condo market where roughly six in ten new listings do not sell in the month they hit the market, and a suburban detached market where more than half do. If you own the first thing, the improving headline is not describing your property. I made the same argument about condo values not clearing appraisal and nothing in the July data walks it back.

What this should change about your fall listing

Three things.

First, the comp set you price against is missing the failures. Sale-to-list averaged 97.8% in July, down only slightly from 98.0%. That number only counts homes that sold, and it measures against whatever the list price was on the day the offer landed, not the original ask. About 1,500 sellers found out what their real number was and are not in that 97.8% at all. Pricing to it means pricing to the survivors.

Second, median days on market went from 24 to 28. Add four days of exposure and you have a market where the adjustment is happening in time rather than in price, at least so far. That is what a market looks like right before the price adjustment, not instead of it.

Third, the summer withdrawal wave is the fall competition. Those 1,400 to 1,600 properties did not evaporate. A good share will come back in September with a September number and a stale showing history behind them. That is who you will be competing with, and the fall market does not fix an overpriced listing on its own.

What I am watching on September 2

The Bank of Canada holds again on September 2, most likely. July was the sixth consecutive hold at 2.25%. I have said for a while that the cut people are waiting on is not the thing that unlocks this market, and another hold mostly just removes the excuse.

The number I actually want is the one nobody prints. When the August release lands in early September I will run the same reconstruction. If unsold exits stay above the sales count for a second straight month, the citywide ratio is describing seller fatigue and not buyer demand, and the fall pricing conversation changes accordingly. If exits fall below sales while the ratio holds in the low 50s, July was seasonal noise and the improvement is real.

One month is not a trend. But a month where more Ottawa listings quit than closed is worth knowing about before you sign a listing agreement.

Deciding whether to list this fall, or wondering whether the place you are looking at already failed once at a higher number? I will pull the actual history on it. Not the board average, the specific property and its specific segment. Call me at 613-262-6545 or write fil@613realtor.ca and I will have the numbers open when we talk. You can also see what is currently active if you want a feel for the competition first.