From A Seller’s To a Buyer’s Market. Where Is Toronto Standing Now?
Still, most neighborhoods are now in a balanced market, and no one has the upper hand, neither sellers, nor buyers. These neighborhoods are: Wexford Maryville, Mount Dennis, Don Valley Village, Scarborough Village, Willowdale West, Willowdale East, Parkwoods-Donalda, Centennial Scarborough, Bathurst Manor, Bayview Village, Agincourt, etc.
How To Know That The Market Has Shifted?
To measure market activity, analysts usually pick an area and a time period, take the number of sales and divide it by the number of new listings that were added in the same period. A balanced market means that about half of the newly listed homes are sold, and if the number climbs to 60%, the market clearly shifts into a seller’s market. Everything below 40% indicates a buyer’s market with significantly more listings than sales, giving buyers a clear advantage. In a buyer’s market, sellers are more willing to lower the price or to meet buyers’ requirements if they have any, etc. as they know that another buyer might not come along so fast.
Most Toronto neighborhoods were in a buyer’s market from 2014 to 2016, but it came to a sudden turn in 2017 where almost all of the Toronto neighborhoods shifted into a seller’s market. In 2018, the tide has turned again.
A year-over-year comparison for last month showed that sales are down by 35%, prices by 12% and listings are up by over 7%. But, to be fair, February 2017 was a record-breaking month in real estate, so we can’t objectively use it as a benchmark, given that current home prices are still 12% higher than in February 2016 and that inventory is still below average.
The low inventory could become an issue again with the onrush of buyers during the spring and summer which will push prices up, even in the more affordable condo and townhouse markets. The market may be healthier and more balanced this year, but affordability is still a huge concern for many buyers. Many of them have postponed their home purchase “for later“ until they have saved up enough for a down payment or found a way to qualify for a decent mortgage.