What is a Seller’s Market?

What is a seller’s market? Dan takes less than 2 minutes for a quick explanation:

Everybody loves real estate, and many people love to talk about it. Myself included!

When discussing the real estate market, you may hear the phrase: “It’s a Seller’s Market” or “It’s a Buyer’s Market” or even, “It’s a balanced market”.

What does this mean?

What is a Seller’s Market in real estate?

A seller’s market is when the negotiations favour sellers over buyers. Sale prices increase during a seller’s market and homes sell faster.

Inventory versus Sales

Another way to define a seller’s market would be the ratio of inventory of homes for sale to the number of sold homes in a specific timeframe. For instance, the total sales of residential (non-condo) properties in January 2020 in the Ottawa Real Estate Board (OREB) was 558. Total homes that were “active”, which means previously or newly listed during the month, was 2176. The ratio of 2176 / 558 is approximately 3.9…this means that in theory, all homes would be sold in less than 4 months if no more homes were listed.

The Ratios

A listing to sales ratio of less than 4 is considered by many to be a seller’s market. If the ratio is over 6 (implying more than 6 months of inventory) it is considered a Buyer’s market. Between 4 and 6 is considered a balanced market. These ratios are just generalizations used by industry experts (e.g. realtors, economists, bankers) to help define the real estate market and give guidance.

Condos

The condo ratio for January 2020, in OREB, was 514 / 222 which equals approximately 2.3. This number would imply an even stronger Seller’s market for condo’s than for freehold homes.

I’m here to educate, inform and guide you through the buying, selling and real estate investment process. I guide you through the important real estate subtleties.

Let me know if you have any questions.
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Dan Moloughney, Broker of Record
Ottawa Urban Realty Inc.

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