Toronto Real Estate Board reported 4,986 transactions in January 2010, an 87% increase from the previous year.    The number of listings continue to be a major concern, as we saw 41% less inventory from this time last year – just 12,052 homes available for sale.  This is the lowest number of homes available in January in all the data that I have (stretching back to 2003).

Average price has climbed a WHOPPING 19% from the previous year; from $343,632 to $409,058.

HOW DO WE COMPARE TO LAST YEAR?

If January 2010 is a strong sellers market, then 2009 was the polar opposite.  While a 19% increase in price would have any economist shaking in his boots, it is important to remember that this time last year we were in a market where the buyers were in control.  This time last year, we had a very low 13% sales-to-listings ratio.  That means we sold only 1 in every 8 homes available a year ago.  This year, the ratio is a much healthier 41% – meaning we are sold 1 in every 2.5 homes available.

WHAT KIND OF MARKET ARE WE IN?

Based on the sales-to-listing ratio, we are currently in a sellers market.  However, if we analyze the numbers it would indicate that the strength of the sellers market is starting to weaken a little.  This is based on the sales-to-listing ratio: in a balanced market, we believe 1 in every 4-to-5 homes will sell; this would be a sales-to-listing ratio of approximately 20-25% (Anything below that number indicated a buyers market: as seen in January 2009 when it was 13%; anything above that would indicate a sellers market which is where are right now).  In the last 6 months, we have seen that number reach scary heights – 58% in June, July & October, and have been over 50% since June 2009.

The image below shows the ratio since 2007 – and you can see how it shifted so dramatically from a buyer’s market to a strong (and scary) seller’s market in 2009 that resulted in big increases in average price.

HOW DOES IT LOOK LIKE IN THE REAL WORLD?

I get asked “How is the market” about 4-6 times every day.  My answer always depends on whether you are on the buying end or the selling end.  Sellers right now have the luxury of having more buyers to choose.  Last week we listed a townhouse in North East Mississauga and we had multiple offers and we managed to get significantly over asking.  On the same token, we have worked with buyers and competed with 5 or 6 other buyers on homes.  We have won some offers and lost some offers – as is the nature of the beast.

If you are thinking about selling – there is no better time that now.  We don’t know what the market will look like in a few months.  If you are buying, patience is the key in finding the home that you love and working with your agent to get it at a price that makes sense.

Until Next Month!