Here are 8 key indicators I use to check on the health of the Toronto real estate market!
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Hi it's Kenneth Yim from Keller Williams Realty. I know you get a lot of mixed headlines with what's happening in the Toronto real estate market, so I'm here to give you eight key indicators as to what's actually happening. Check it out!
So I have to tell you, this is only for 416. If you need the numbers for 905, please feel free to give me a call.
Okay, I know the number you are all curious about is the average price. So here's everything since 1996, and as you can see, if you draw a regression line, you can see that we're slightly above average, but you know Toronto has been growing at a rapid pace and you know it's a wonderful place to be. We're still cheap compared to the rest of the world.
Here's actually what's happening, year over year. Now we'll zoom in a little bit, we'll see the five year average. And you can see it follows two little humps. So here we are. We're just about to finish the fall market, getting in to the winter months. Many of you ask, "when's the best time to sell"? Well, it's either spring or fall, that's the highest average price, and the lowest price is typically the summer when everyone is on vacation, and the winters when the holiday season hits.
So really, it's up to you. I mean the average price is the highest in the spring and the fall, but as you will see in the next slide, you will have the most competition. Similarly, if you are looking to buy at the lowest price point, you might not have a lot of options in the winter and the summer.
So let's get in to the next slide. The number of units sold. This shows the volume of activity, and again it follows two major humps, you'll see in the spring and in the fall you'll have the highest activity, and in the summer and the winter, everyone is on vacation and holidays, and there's less units sold. So here we are now, and as you can see there's going to be a lot less activity in the coming months, but then again the average price goes a little bit lower. So it might be an opportunity for buyers.
Now the third key indicator is the number of new listings in the market. As you can see, we have a lot more new listings on the market. But it does follow the typical curve that we've seen before.
The fourth thing, let's match them up. So the ratio you see here is basically the amount of units sold compared to the number of new listings that come on to the market. Right now we're just around 60% of [units sold] to new listings. So if you look at the trend line, we're seeing slightly less sales, but overall the market is pretty healthy.
The number of active listings. So that's what's currently listed in the market and hasn't been sold yet. We'll see the trend line is moving a little bit up. In the beginning part of the year, you can see it's been pretty low, so things have been selling, fast, as you know.
Now if you take these numbers together, I think this is the most powerful slide, the months of inventory. So basically, that means if nothing new were to come on to the market, how many months would it take to sell whatever we have active on the market? So we take the number of active listings, divide that the number of sales every month. So as you can see right now, the months of inventory is about 1.8 months. So if nothing new were to come on the market, it would take about 1.8 months to sell everything that we have on the market. It's actually not that bad. Compare this to 2008 when we had the big tech bust, and when the U.S. economy collapsed. So at the peak of the crash, we had almost 8 months of inventory. As you know, that blip didn't last long. Overall, we're still pretty healthy.
The days on market, tells us on average, how long it takes to sell a home in today's market. And as you can see, the numbers are trending downwards. Although we're a little bit above the average line, it's still going down. We're looking right now of an average of about 21 days to sell your home in today's market. And again, it follows the same seasonality curve. The spring and the fall is the hottest market, and the summer and the winter it's a little bit slower because people are on vacation. In this spring in 2017, you saw a crazy boom, everything was selling really fast.
So this last slide, the sold to ask ratio, will tell you if the market is typically trending to have bidding wars or not. So if you're asking for $100.00, right now you're going to get $99.30. In the early part of the year, it was actually approaching 112%! That's crazy! So right now we're a little bit under, I think it's a great time to get in, people are getting under what they're asking. If you're looking to sell, well, maybe now is the perfect time to trade up.
So as you can see, we're not going to head to a crash any time soon. But we have less than a month before the government implements their new mortgage qualification rules. If you need to know how that's going to affect you, please give me a call.
Don't forget to subscribe to our YouTube channel, or give us a call and we'll give you a one-on-one market update with that's going to affect you. Thanks for watching!