Any savvy homebuyer or seller knows the importance of the sales-to-new-listings ratio: This metric, which measures how many newly-listed homes are selling within a specific area each month, provides valuable insight into the level of buyer competition and can greatly inform offer or listing strategy.
For example, if you know your dream home is located within a tight sellers’ market, you can be sure you’ll find yourself in a bidding war situation and had better prepare to hike your offer amount, or even drop your financing or inspection conditions. On the flipside, bidding on a home within a buyers’ market often means there’s wiggle room to negotiate on price, closing time, and even extras such as chattels and furniture.
What makes a sellers’ market?
Determining whether a market is within buyers’, sellers’, or balanced territory is based on its sales-to-new-listings ratio, or SNLR. According to the Canadian Real Estate Association, an SNLR between 40 – 60% is considered a balanced market, with below and above that threshold indicating buyers’ and sellers’ conditions, respectively.
This metric can be used to determine buyers’ conditions in markets of any size, and is helpful when drilling down into activity at a local level or assessing activity on a larger scale. For example, the Ontario housing market can be considered a balanced one with an SNLR of 56%, as can the City of Toronto
, at 57%.
However, many often confuse a buyers’ market with an affordable one - the two aren’t mutually exclusive. In fact, according to new data compiled by Zoocasa, some of the province’s most affordable markets also feature the tightest selling conditions.
Ontario’s top sellers’ markets
The findings reveal some of Ontario’s northern communities, which tend to have overall lower average home prices, are experiencing extremely tight sellers’ conditions. In markets where homes sell for less than $500,000, 10 of 12 municipalities fall within this range.
It’s most acute in Thunder Bay, where the average home cost $225,945 in October and the SNLR is 90%, as 205 of 227 newly listed homes sold within the month.
These tight sellers’ conditions are also present in North Bay with an SNLR of 88%, as 116 of 132 homes sold at an average of $258,597 and Sudbury, where 236 of 271 homes sold, comes in third with a ratio of 87%. Sault Ste. Marie is also within steep sellers’ territory, with a ratio of 86%, 162 of 189 homes sold, and an average home price of $184,028.
Check out which Ontario markets are within sellers’ buyers’, or balanced territory in the infographic below:
Penelope Graham is the Managing Editor of Zoocasa.com, a real estate website that combines online search tools and a full-service brokerage to let Canadians purchase or sell their homes faster, easier and more successfully across the nation, including homes for sale in London, Ontario, Toronto, as well as Ottawa homes for sale. Home buyers and sellers can browse listings on the site, or with Zoocasa’s free iOs app.