How to Determine a Buyers' or Sellers' Market

29 May 2019
Remax-Condos-Plus

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.


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