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How can you tell if we are in a buyer's market or a seller's market? Well, stay tuned, I'll tell you how.
That's a really good question, and it depends on numbers you are looking at. So, according to the Canadian Real Estate Association, the national average sale price is up 1.72% year-over-year, from this time last year. But this includes all of the provinces, and all the territories in ALL of Canada. So let’s look at the Toronto market and the resale stats there.
So the number I really like to use to determine between a seller's market and a buyer's market is the Sales-to-New-Listings-Ratio. And it's just that, it's basically takes the number of new listings and the number of past sales, and divide the two numbers and you get a ratio. So if you get 10,000 new listings on the market, 5,000 sales, that leaves you with another 50% of listings for next month to sell.
So in theory, it should be be 50% throughout and that'd be balanced. Well, like to say that if it's 60% or higher, then you are in a seller's market, which basically means that there's more sales versus new listings to replenish those sales next month, right? So everyone is fighting over the same amount of listings.
A 40% ratio or below is a buyer's market, which means there's more new listings that come on to the market than there are sales. Make sense?
Last month in June 2019, there was 8,860 sales in all of the Toronto Real Estate Board, and this got replenished with 15,816 new listings, giving us a Sales to New Listings Ratio of 56%. So remember, anything between 40 and 60% is a balanced market, a 50/50 ratio is a perfectly balanced market, meaning there is enough inventory to replenish the amount of sales going on.
If you look at the detached homes in Toronto, the Sales to New Listing ratio is 50.8%, perfectly balanced.
However, not so good luck for the sellers in York Region. There's a Sales to New Listing Ratio of 39.2%, making it a buyer’s market up there.
For Downtown Toronto condo owners, it’s more of a seller’s market, where the Sales to New Listing Ratio is 58.7%. That trend is slowly edging downwards though, and I think it's going to be more of a balanced market sooner or later, but right now it's still a seller's market.
There’s a lot of other factors that we use to determine the overall health of the Toronto real estate board, such as the average price, number of units sold, average days on market, and etc. But let's dive in to the Toronto numbers for a second.
The average price in the overall Toronto Real Estate Board right now is $832,703.
The average price of a detached home in Toronto is just over $1.3 million, and for York Region it's $1.115 million. The average price of a condo in the core of Downtown Toronto is $706,490. To me that's kind of crazy, it's a little bit high, but it's still a seller's market so... maybe it's a good time to trade up if you're thinking about that?
We had two major government events that happened over the past 2 years, and that was the stress test in January 2018, and the Fair Housing Plan of April 2017. And in the news recently, the Bank of Canada announced a lower benchmark qualifying rate, making the stress test a little lower at 5.14% for a qualifying rate vs 5.34%. So I still think there's more room to grow in the market, and you can see here that the Greater Toronto Area market has bounced back from the January 2018 stress test, but not so much from the April 2017 Fair Housing Act. This is certainly the case for detached homes in Toronto and York Region. However, Downtown Toronto condos don't seem to be affected by either of these two events and the prices just keep going up.
I mean, it kind of makes sense, they are more affordable housing option for all of the housing options out there.
So as you can see, the numbers are open to so much interpretation. To get an accurate analysis of your local area market and your home or investment property, give us a call. Visit us at www.broadviewavenue.ca and click on the button to get a 15 minute call with us.