September 16, 2022

The Top 5 Numbers that Lead to Deals in Today’s Real Estate Market

We’ve spent a lot of time over the last couple of months talking about the market shifting from a strong buyers market to a balanced market, and the possibility of a shift to a buyer’s market.

I’m not surprised that August and September have been very slow in terms of sales. Prices haven’t been impacted as much….yet. Buyers are waiting to see the impact interest rates are having on their affordability and not surprisingly a lot of sellers are still stuck with the high May price point.

Herein lies the opportunity for both buyers and sellers in the next couple of months.

There are 5 critical stats that I follow to identify opportunities and market trends ahead of everyone else:

New Listings

How many new listings are coming into the market each month is a good starting point that shows seller confidence. In the Guelph market, the historical average is 275 listings per month. In a hot market like last year, sales outpace the number of new listings coming in. In a slower or shifting market, those listings start to pile up and buyers have more selection and more time to make buying decisions.

Months of Inventory

This is an interesting stat to track. This number is currently sitting at 1.7 months of supply, which means it would take almost 2 months of sales at the current rate to sell every available house currently on the market, assuming no new properties were listed. Historically, anything between 3-4 months of supply is considered a balanced market. Above 4 months, and we consider it to be a buyers market because supply far outstrips demand at that point. As an FYI at the lowest point in the past 13 years, supply was 0.1 month in December 2021. Less than 2 weeks of inventory. No wonder there was some panicked buying.

Days on Market

This number is a direct result of points 1 and 2. More new listings, more months of inventory means the average or median days on market will start going up. In Guelph, the median days on market is 23 days for a listing to be sold. The low point last year? 6 days. The highest point in the past 12 years was 39 days. Technology has helped drive Days on Market (DOM) down. Pre-internet it took closer to 90 days to get a property sold.

Low DOM reflects a fast paced market with high demand and usually low supply.

Higher DOM with building inventory and slack demand means there will be a higher propensity for buying opportunities.

Median Price per Square Foot

This is the equalizer when it comes to comparing the sale price of different homes. It’s prominently used in the condo and commercial market. Using the average price per square foot is a good indicator of how well priced a home is compared to what has been selling.

Percentage of Sales Price to List Price

This stat will tell you how much negotiating room you should expect. How much is the sales price below the listing price? For buyers, this is the number that you don’t want to be higher than the average or median because that means you’re likely overpaying. For sellers, I use it to set the floor price. As a listing agent, when my listings are selling above the median percentage I know I’m performing above average for my clients. As a buyer agent, I’m striving to help my clients buy below that percentage. I love this statistic because I can demonstrate to my clients on either side of the transaction my effectiveness and value add to the transaction.

When you track these 5 vital statistics in the market, you can’t help but position yourself ahead of your competition. Your Realtor should be familiar with these basic stats and be able to guide you on how to use them to your advantage either in buying or selling.

Thanks for reading and have a great weekend,

Paul

Junction Streetfest 2022

Our 2nd annual Junction Streetfest is back in support of KidsAbility! Join us this Sunday, September 18th at 7 Edinburgh Road South for an afternoon of live music, craft beer & food, and activities for the whole family! Free Admission!

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AUGUST 2022 MARKET REPORT

THIS REPORT CONTAINS

August summary & analysis for Guelph
Neighbourhood breakdown for Guelph
Full home type breakdowns for Guelph, Kitchener, Waterloo & Cambridge