What’s the difference between a buyers’ market and a sellers' market?

What’s the difference between a buyers’ market and a sellers' market?

You’ve probably been hearing about Toronto moving from a sellers’ market to a buyers' market. But is that actually the case? And what do those terms really mean? 

It all comes down to supply and demand, and a measure of that is “months of inventory” – how many months it would take for every active listing to sell if no new properties came on the market, based on current market conditions. 

  • 4 months or less is considered a sellers' market: one where sellers have the advantage.

  • 4-6 months of supply is considered a more balanced market: neither buyers or sellers have a particular advantage. 

  • 6 or more months is a buyers' market: one where buyers are in greater control.

What is a buyers' market?

It's when there are more properties for sale than there are interested buyers – when supply exceeds demand. There's less competition, prices drop, properties stay on the market longer, buyers can stipulate conditions, and sellers have to do a lot more in the way of marketing, staging etc. to attract buyers – and be willing to negotiate to make a sale happen. 

5 things you'll typically see in a buyers' market:

  1. Lower/more competitive prices

  2. Offers under asking

  3. Fewer offers

  4. Conditional offers

  5. Longer time on the market

What is a sellers' market?

It's when there are more buyers than available properties. When supply is low, competition ramps up. Properties sell faster, for higher prices, and buyers are willing to do more (foregoing conditions, agreeing to shorter closing dates, offering more money and accepting properties “as is”) when they're competing with other bidders. There’s less opportunity for buyers to negotiate: the sellers are in control. 

5 things you'll typically see in a sellers' market:

  1. Higher prices

  2. Fewer listings

  3. Bidding wars/multiple-offer situations

  4. Offer dates

  5. Sellers turning down offers at (or even above) their asking price

Markets differ from neighbourhood to neighbourhood

Toronto isn’t one market. It’s a series of micro markets that all behave very differently. Right now, there are some neighbourhoods in the 905 that are definitely in buyers' market territory, while sellers are still very much in control in other areas. 

The type of market also depends on the type of property you're selling. Detached houses in the city have stayed competitive, with prices still increasing month-over-month and year-over-year in some areas while other neighbourhoods are seeing drops.

This interactive map (Toronto Star subscription required) shows some of those micro markets in action. You can see how prices and demand in specific areas have gone up or down year-over-year and month-over-month as well as by property type. 

So what does all this mean to you as a buyer or seller?

If you're a buyer in a buyers' market, the world can be your oyster. Lots of selection, less competition, less pressure and plenty of good opportunities to be had. That said, if you LOVE something, you still need to move quickly. After all, we live in one of the top cities in the world and a great property is a great property

If you're a buyer in a sellers' market, you’ll need to jump on listings fast, expect to compete with multiple offers, and find ways to encourage the sellers to pick you over other bidders. 

If you're a seller in a buyers' market, don't panic. Don't sell if you don't have to, but if you do need to move, you can still get a good price by making your property stand out with great staging and marketing. You’ll probably have to adjust your expectations about what you can get for your property: be open to reasonable offers. And get advice from your REALTOR® before you even start to come up with a strategy that works for this climate, 

If you're a seller in a sellers' market, you're in the driver's seat. A good sales strategy will likely net you a great selling price without conditions. But that doesn't mean you sit back and do nothing. This is when a great agent will shine and get you massive sales records by leveraging offers against each other and fighting hard for you. You always want to make sure you work with the best of the best here, because an inexperienced agent can easily leave money on the table no matter what market you’re in.

A good agent is your best friend, no matter the market

Ultimately your best bet is to work with a very seasoned REALTOR®, one who understands individual micro markets and can guide you through a smart move. If you need an expert who really has their finger on the pulse and can help you do well as a buyer or a seller in any market, get in touch!

About Sean Miller

Sean is one of the top realtors at Property.ca. He has the drive and expertise to guide you through one of the most important financial decisions you’ll ever make. Whether you're a first-time buyer, a seasoned seller, are new to the Toronto market or are looking for a great investment, he makes the experience as stress-free as possible, quickly assessing your needs and offering a full range of options that fit with your lifestyle and budget. Navigating the GTA market is his specialty, and stellar customer service and deep market expertise are his calling cards. He is always ready to go the distance to help clients make the right choice, at the right time and the right price.

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