The headlines regarding Greater Toronto’s real estate market, heading out of the summer and into the fall selling season, could’ve been inspired by Hunter S. Thompson, himself. Fear. Loathing. And more than a dash of craziness and politics.
While municipal, provincial and federal governments all took steps this year to help cool the Golden Horseshoe’s property market, using various taxes and regulations, the country’s biggest real estate market is still quite robust. Sure, the market has slowed, but that’s a far cry from the market crash that some analysts were predicting.
According to recent statistics released by the Toronto Real Estate Board (TREB), all seven regions in the GTA are now balanced or in a buyer’s market. This includes Metro Toronto, which is currently in a balanced market. But dive a bit deeper and we can see differences emerge. In Metro Toronto, 38% of the city’s neighbourhood regions remain in a seller’s market when it comes to single-family homes (a property category that includes detached, semi-detached, link and row or free-hold townhouses). Another 43% of these broad neighbourhood regions now have balanced markets, while the remaining 19% are in a buyer’s market.
While super-popular areas such as Wychwood, Casa Loma, Little Portugal, Dufferin Grove and Trinity Bellwoods still lean very much in favour of sellers, other areas are either balanced or in a buyer’s market. Neighbourhoods such as Leaside and Thorncliffe Park, East & West Willowdale, Bayview Village and even High Park North now offer buyers a much more balanced and reasonable opportunity to buy a single-family home.
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Why use active listings versus new listings?
So, why bother measuring the market using sales-to-active listings? Why not rely on the industry standard of sales-to-new-listings? It would be so much easier if we did just rely on sales-to-new-listings (SNLR), but by using the sales-to-active listings ratio, we remove the sugar-coating SNLR can leave on market trends. By using active listings, rather than new listings, we are choosing to keep the stale listings — the homes that are just sitting on the market — as part of the overall equation. In this way, we get a more realistic and comprehensive view of how a particular region is fairing when it comes to market absorption. (It’s also why the sales-to-active-listings ratio is also known as the Market Absorption Rate.) Expressed as a percentage, the sales-to-active ratio (or MAR – Market Absorption Rate) is calculated by taking the total number of sales at the end of a given time period (in this case, a calendar month) and dividing it by the total number of active listings available during the same time period. Using Toronto’s numbers at the start of September as an example:
869 sales / 2,139 active listings = 40.63%
The higher the ratio, the more demand for the property and the more opportunity a seller will have to attract a higher price for their home for sale. A lower ratio indicates slower sales and the potential for falling house prices. A balanced market is when the supply of housing meets the demand from potential buyers. In a balanced market, sellers usually accept reasonable, close-to-list-price offers; homes typically stay on the market for close to the average number of days and prices remain fairly stable within the region.
According to the TREB and the Realtors’ Association of Hamilton-Burlington, a ratio between 35% and 55% indicates a balanced market. Ratios above 55% indicate a seller’s market, while ratios below 35% indicate a buyer’s market.
Key takeaway: Choose to buy in a balanced or buyer’s market, or wait
Given that almost half of Metro Toronto’s areas are still firmly entrenched in a seller’s market, buyers would be wise to really shop around. The key here is to be open to the market: If you can wait. Wait. If you need to buy, consider an area that suits your needs but doesn’t have you fiercely competing against other buyers. For a few good bets, consider the following (ranked based on market absorption ratio):
5 of the Top Areas in the GTA that Favour Buyers
- C07 (West Willowdale, Newtonbrook, Lansing – Westgate, Westminster – Branson)
- C14 (East Willowdale, Newtonbrook)
- C13 (Parkwoods – Donalds, Banbury – Don Mills, Victoria Village)
- C12 (St. Andrews – Windfeilds, Bridle Path – Sunnybrook – York Mills)
- Simcoe Region
As a seller, however, it’s nice to know if you’re area is still hot, hot, hot. Why? Because there’s no need to adjust your expecation— or asking price — if demand in your area continues. Here are the neighbourhoods that currently favour sellers (based on market absorption rates):
5 of the Top Areas in the GTA that Favour Sellers (ranked in order, based on market absorption ratio)
- W07 (Stonegate – Queensway)
- E01 (North & South Riverdale, Blake – Jones, Greenwood – Coxwell)
- C08 (Waterfront Communities C8, Moss Park, Church – Yonge Corridor, Regent Park, North St. James Town, Cabbagetown – South St. James Town)
- C10 (Mount Pleasant East & West)
- W02 (High Park North, Lambton Baby Point, Runnymede – Bloor West Village, Junction Area, Dovercourt – Wallace Emerson – Junction)
For information on the Greater Vancouver market, please see the most recent Zolo Housing Market Tracker report.