How to Determine a Buyers' or Sellers' Market

29 May 2019

Everyone wants to be an expert in determining whether we are in a buyers or sellers market.

Most people just guess, but there is a more accurate measure. It's called the Sales-to-New Listings ratio. You take the number of sales over a period of time, usually a month, and divide it by the number of new listings for the same period. That is a flow to flow concept. Some people try to use 'Active Listings', but that is a stock value and is really meaningless.

Most experts agree that range for a balanced market is in the 40%-60% range. Under 40%, it is a Buyers Market, and over 60%, it is a Sellers Market.

A Criticism of agents, is that we just cancel and relist to refresh a listing. That would then understate the real percentages and would create a bias for a Buyers Market.

In the GTA, the current ratio is 51%. Last year at this time it was 47%. The size of this market is too big to help individual buyers and sellers. Just focus on 416 and the number is 56%, almost a Seller's market. Look at just downtown condos, and the number is now 60%.

Toronto sales-to-new-listings graph

My suggestion? A good agent will get you the percentages for the exact market you are interested in. Then you will know how to deal in making or receiving an offer.

Want to stay up to date on our monthly market reports?