There is a tendency in real estate to talk about “the” market as if there is one, uniform market out there.   

As anyone who has ever considered buying in two different areas will know, geography plays a huge role in how much homes cost – and it is equally impactful when it comes to whether a market is hot or not.  

Whether it is one neighbourhood versus another a few minutes away, or two condo buildings on the same street, the market for each can be radically different in terms of composition and activity. 

Similarly, if one looks at the level of competition in a given market, it can vary signficantly at different price points.  In some cases, the entry level price point is quite competitive, whereas the mid-end properties in the same market have few interested buyers. 

Finally, the housing type also plays a big role in the state of the market.  A seller in a neighbourhood full of detached homes at the $1M mark may think “the” market is quite good for sellers, whereas someone trying to get rid of a condo in the $600K range may be seeing tons of competition and great difficulty in selling at the desired price. 

Apart from these specific aspects that determine how a given market is defined, we wanted to go over the the types of markets that exist – and why, right now, it’s a very good time to be a certain type of buyer.   

Let’s get into it! 

This ain’t no Farmer’s Market. 

In real estate terms, we have three types of markets that exist when we’re talking about the conditions in the market.  This is a very broad approach, but it is useful to quickly review what they are and who they benefit. 

In a buyer’s market, with lots of inventory and few buyers looking for properties, it’s a great time to be one of the few people interested in buying real estate. 

• In a seller’s market, with little inventory and many buyers on the hunt, it’s a great time to be a seller who has a property available for buyers to fight over. 

• In a balanced market, with a decent number of homes for sale and a reasonable level of active buyers looking to purchase a home, it’s OK to be on either side.  As a seller, you’re not making out like a bandit, but neither are you forced to accept a lower sale price as the only option.  As a buyer, you have a good number of options for homes, but other people are also looking, and you can’t low-ball your way to a bargain purchase. 

There you have it.  In simple terms, if you’re a seller, you want a seller’s market, if you’re a buyer, you want a buyer’s market.  If you can’t have what you want, a balanced market is next best.  So, what sort of market do we have these days?  Despite the time of year, it is not, in fact, a Farmer’s Market.

The Summer of 2024 Welcomes you to a Buyer’s Market! 

Every month we do a review of the markets with the GTA, including Toronto, Peel, Halton, York, Durham, Dufferin and Simcoe.   

When we reviewed the June, 2024 market stats, we looked at three key stats that identify what type of market we’re in these days. 

The first is Sales to New Listing Ratio, or SNLR.  The SNLR tells us how many of the sales we saw this month came from new listings, versus existing listings that had been on the market from previous months.    

• If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases. 
• Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase. 
• Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month.  This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay. 

As of June, 2024, the average Sales to New Listing Ratio across the GTA was about 36%, putting us firmly into a Buyer’s market.  In most of the markets within the GTA, June was the lowest SNLR this year, so the best Buyer’s market so far this year. 

The next stat we look at to determine what type of market we’re in right now is the number of active listings.  This is the number of actual, currently for sale properties at the end of the month.  This number is therefore comprised of the older listings already on the market at the start of the month, plus any new listings that didn’t sell in the month, less any older or new listings that did sell before the end of the month. 

In June, 2024, we had almost 22,000 active listings on the market across the GTA.  A year ago, we had just over 14,000 active listings, so buyers have about 9,000 more options this June than a year ago.  Across all of the GTA markets, June, 2024 saw the largest number of active listings in more than two years.  Using this stat, we are most definitely in a Buyer’s market! 

Finally, we look at the Months of Inventory, or MOI.  This statistic tracks how long it would take for all properties for sale in any given market to sell if we stopped having any new listings.  The higher the MOI, the more of a buyer’s market, the lower the MOI, the more of a seller’s market.  Somewhere between three to four months is considered a balanced market, but we’ve often seen below two months in Toronto and most of the GTA. 

As of June, 2024, the average Months of Inventory across the GTA was 3.7 months.  While this is towards the high end of what is considered a balanced market, we’re inching into a Buyer’s market according to this statistic. 

While a Buyer’s market benefits buyers far more than sellers, there are certain types of buyers that benefit tremendously from the current market conditions we’re seeing.  If you fit into one of these types of buyers, then it’s time to make a move. 

Buh-bye rentals! 

The first type of buyer that should be very happy with our current markets in the GTA is the first-time buyer who is currently renting a place.  The level of inventory for properties is at a two-year high, and this is particularly true for condo apartments.  In the city of Toronto there are over 6,200 condo apartments for sale as of the end of June!  The Sale to New Listing Ratio for condo units is 26.5%, which means that very few of the listings on the market are being absorbed each month, which is a great opportunity to push on the purchase price. 

If you have been living in a condo unit and paying down a landlord’s mortgage, speak to a mortgage broker ASAP and see if you qualify for buying a place of your own. 

The level of options is huge right now and that is true across a number of price points in the condo market.  While markets outside of Toronto have fewer condo units in general, they are also seeing a rise in the number of available condo units for sale. 

Moving on up! 

The second type of buyer who is well suited for our current market is the home owner who is looking to move up the property ladder.  Yes, that means we’re saying a certain type of seller can also benefit from this current Buyer’s market! 

We often refer to the spectrum of housing as the property ladder.  Most buyers get on the first rung of the ladder at the lowest price point in the market, and that’s often condo apartments.  Overtime, they move up the ladder, going to a higher price point and often a different housing type.  The next step is typically a townhouse (whether freehold or condo), followed by a semi-detached home and finally the top of the ladder is a detached house. 

There is some counter-intuitive logic at play in our suggestion that now is a good time to sell and buy, so let’s go into the specific of what we mean. 

A homeowner who owns a condo apartment unit, whether in Toronto or in other parts of the GTA, has seen the value of their condo drop in the past year.   In Toronto, the average price for a condo apartment when down 0.9% in the past year.  In the GTA, it was a bigger drop, going down 2.6% in the past year.  If the property is worth less now than it was a year ago, how on earth is it a good idea to sell now? 

The reason it makes sense is when you take a look at what’s happened in the other housing types on the property ladder.  Let’s use Toronto as our example and talk specific dollars. 

The average price for a condo in Toronto as of June, 2024 is $763,000.  A year ago, in June, 2023, it was $770,000, which means that, on average, if you owned a condo in Toronto in the past year, it went down about $7,000, almost 1%. 

Let’s look at where the opportunity lies for the average condo apartment owner in Toronto. 

In the past year, the average price for a townhouse in Toronto went down 2.7% and the average price for a semi-detached went down 8.9%!  Even detached homes dropped in value more than condo units did, going down 1.6% on average since June, 2023. 

Keeping in mind that the average condo in Toronto dropped $7,000, let’s look at what the dollar value difference is for the other housing types.  

• Townhouses (condo and freehold types) had an average price of $1,006,000 as of June, 2024, whereas a year ago, in June, 2023, the average price was $1,035,000.  That’s a drop of $29,000 in one year.
• Semi-detached houses in Toronto had an average price of $1,282,000 most recently, but back in June, 2023, they had an average price of $1,408,000.  That’s a drop of $126,000 in one year. 
• Detached homes in Toronto had an average price in June, 2024 of $1.758M and a year ago, the average price for such homes was $1.787M.  That’s a drop of $29,000 in one year. 

The clear winner when you look at the above analysis are semi-detached houses.  If you have the ability to move from a condo apartment to a semi-detached house, you’ll have saved yourself, on average, $119,000.  Sure, you would have lost $7K on the sale of your condo unit, but you would have been able to buy a semi-detached for $126K less than it would have cost you a year ago. 

Obviously, these are just averages, so any given specific situation might be different, but it is nonetheless fascinating to see where the opportunities exist these days! 

In our work with our clients, we love to look into the nitty gritty of what current market conditions mean for their individual circumstances.  While understanding what’s happening in various markets in general is useful, it’s when you dive into the specifics for where you live – and where you want to live – that we identify opportunities.  If that sounds appealing, get in touch with us to go over what’s next for you!