Buyers Market vs. Seller's Market: What's the Difference | Alex Beauregard

The Toronto real estate market is influenced by a number of factors. Things like mortgage rates, interest rate hikes, inflation, employment, infrastructure and development, Provincial government intervention (Fair Housing Plan), and the overall health of the economy ALL affect home prices.

The balance of supply and demand, competition and the number of sales to listings are what determines if it is a buyer’s, seller’s, or balanced market.

The Difference Between A Buyers and Seller’s Market

On a monthly basis, real estate data is collected and the number of sales are compared to the number of listings to measure the “sales to listing” ratio. This ratio determines the type of market that exists.  For example,

  • if there are 7 sales for every 20 listings, i.e. 35% sales-to-listings ratio (or lower), it is considered a buyer’s market. 
  • If there are 11 sales for every 20 listings, i.e. 55% sales-to-listing ratio (or higher), it is considered a seller’s market. 
  • Anything in between 35-55% is considered a balanced market.

How does this affect you as a buyer or seller?

Buyer’s Market Definition 

A buyer’s market is when there are a greater number of homes for sale than there are buyers, ie. when supply exceeds demand.

In a buyer’s market, buyers have these advantages:

  • buyers can take longer searching and considering their options (homes are on the market a little longer)
  • they have greater leverage at the negotiating table because sellers are more anxious to sell
  • they can protect themselves with financing or inspection conditions, and
  • home prices are likely stable or on the decline, and buyers can ask for more concessions from the seller.

     Tips for Sellers in a Buyer’s Market:

  • Make sure your home is priced appropriately and is brought to its full potential (clean, move-in-ready, staged) to attract the largest number of buyers.

     Tips for Buyers in a Buyer’s Market:

  • Buyers have a greater advantage buying in this market than if house-hunting in a Seller’s market. This is an opportunity to find a greater home at a lower cost
  • Bonus tip: Save up for a good down payment; while 10% is the requirement for most homes, 20% is ideal to avoid the CMHC premium.

 

Seller’s Market Definition 

A seller’s market is when more buyers are competing to buy a limited number of homes for sale (low inventory), i.e. when demand for homes exceeds the available supply.

In a seller’s market, sellers have these advantages:

  • higher home prices and rapidly increasing value
  • buyers need to act quickly to secure a property (homes sell within days or hours!)
  • the number of conditions buyers can include with their offers is null and
  • competing buyers will drive prices up in multiple offer situations, resulting in homes selling well above asking price.

     Tips for Buyers in a Seller’s Market

  • Recognize that the seller has the advantage in a multiple offer situation. Work with an experienced Realtor, one who can come up with a strategy to compete against other homebuyers but who won’t push you beyond your comfort zone or rush you into making a regretful decision.
  • Make sure you’re pre-approved and prepared to come in with a strong (earnest, sizeable deposit), and a clean, condition-free offer.

     Tips for Sellers in a Seller’s Market:

  • This is a fantastic time to sell your home as you will secure a higher sale price.
  • If you need to buy a home and sell, and you haven’t already secured that next home, consider negotiating a lease-back, where you arrange to rent your former home from the new buyer for a month or two while you finalize your purchase.


Balanced Market Definition 

A balanced market is when there is about the same number of homes for sale to buyers, when supply and demand are relatively equal, and home prices are more in line with the rate of inflation. Typically speaking, competition is equal, buyers’ offers are made & sold in a reasonable amount of time, and prices remain stable. 

 

What is the current status of the Toronto Real Estate market?

Just about every media outlet writes of a pending bubble burst, about steep declines in home prices and sales-to-listings ratios, about a market moving from seller’s territory to one favouring buyers.   While this may be true for the GTA, it is not an accurate reflection of what we are seeing in the Toronto core.

The condo market has never been hotter, reporting record sales in heated multiple offer situations.  Home sellers in the city’s most desirable neighbourhoods are still experiencing seller’s market conditions, i.e 822 Palmerston Ave. sold for $600,000 above asking last week, and 157 Rusholme Rd sold for $750,000 above asking this week.

The truth is, the market varies greatly from neighbourhood to neighbourhood. Your best bet is to speak with an experienced professional who can give you proper advice based on your unique needs and situation.


Sellers:  If you are wondering if now is the right time to sell your house, my blog post “To Sell or Not to Sell?” covers the Top 5 Questions Sellers Have About Selling a House in Toronto.  If you’re thinking about selling but don’t know where to start, my Comprehensive Guide to Selling Your Toronto Home has everything you need to know. Prefer to chat specifics? Don’t hesitate to give me a call or text at 647-898-4663.  I also love Email at Alex@AlexBeauregard.com


Buyers:  
Whether you are a buyer looking for your first home, or an upsizer worried about timing your buy/sell strategy, I’ve helped many people in your situation and would love to discuss strategy with you.  My Comprehensive Guide to Buying a Home in Toronto has everything you need to know about getting the home you want in a difficult market, and it’s free. Feel free to give me a call or text at 647-898-4663 to discuss your details. I also love Email at Alex@AlexBeauregard.com


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