Spring Market Update: Sales and new Listings Return to Pre-Pandemic Levels
The numbers for March 2023 in the City of Toronto show promising signs of a return to pre-pandemic levels. Sales and new listings are almost identical to March 2019, suggesting a resurgence in the housing market. However, there is one notable difference - the average price. Over the past four years, the average price for March has increased by a staggering 27%!
This rise can be attributed to the unique circumstances created by the pandemic, where changing work patterns and low-interest rates resulted in a high demand for housing and tight market conditions.
It's worth noting that when comparing March sales figures to the previous year, we're actually comparing them to a period at the beginning of interest rate hikes. During this time, sales were higher than usual as some buyers rushed to secure a rate and make a purchase.
The average sale price in the City of Toronto has seen a 13.5% decrease compared to the previous March's high, which surged above a shocking 1.2 million last February and and sustained that level over four months.
Currently, the average price seems to be sustaining itself on a month-over-month basis, albeit at a lower level. But remember, March 2023's average sale price is still 27% higher than the pre-pandemic average price in March 2019 of $830,043.
After explaining why the year-over-year figures are down, it's worth discussing the recent increase in month-over-month numbers. For three consecutive months, the number of sales and new listings have been on the rise, signalling a resurgence of confidence among buyers and sellers and finally, a return to a more typical spring market.
Overall, while there have been fluctuations in the market, Toronto real estate seems to be stabilizing, which is positive news for both buyers and sellers.
Understanding key real estate market metrics: sales to new listing ratio, days on market, and months of inventory
The sales to new listing ratio tells us how many of the newly listed properties are being sold in a certain time frame. If the ratio is around 50%, it means the market is balanced. But if it goes above 60%, that's when we start to see a seller's market, where prices tend to rise. So, the higher the ratio, the better it is for sellers and the more competitive the market becomes for buyers.
The average days on market refers to the average amount of time that it takes for a property to be sold after it is listed for sale. This can be a useful metric for understanding how quickly homes are being snapped up in a particular area.
Lastly, the months of inventory ratio is a measure of the amount of time it would take for all of the currently listed properties to be sold, based on the current rate of sales. It's a useful metric for understanding how much supply there is relative to demand in a particular area. For example, if there are 100 properties currently listed for sale and 20 of them are sold each month, it would take 5 months to sell all of the properties (100 / 20 = 5).
March 2023:
March 2022:
The increase in new listings since the start of the year is notable, more than doubling in number. This surge has surpassed the growth in sales, resulting in a 46% sales to new listings ratio and 2.5 months of inventory we're seeing now in March. Although houses are taking twice as long to sell than last year, the average amount of days a listing is on the market has slowly been decreasing month-over month since the beginning of the year. This indicates a market that is rebounding from the impact of raising interest rates.
Overall, these numbers suggest a unique period where the market is more balanced, and where both buyers and sellers have opportunities. If the number of sales continue to climb and average listing days continue to drop, it typically indicates a market shift towards tighter or more competitive conditions. It will be very interesting to observe how the market evolves in the coming months.
If you have any questions or would like more information on recent home sales in your specific neighbourhood, don't hesitate to reach out here.