How Does a Balanced Market Affect Buyers and Sellers?

No matter if you are a homebuyer or home-seller, you must understand the Toronto real estate market before preparing to buy or sell a property. There is a difference between the seller’s market, buyer’s market and balanced market. These terms are typically used to describe real estate trends. It means that each represents the ratio of potential buyers to properties for sale. This ratio can be different in various regions, cities or neighborhoods. If you don’t have any experience in buying or selling a Toronto property, you better ask the professional advice of a top Toronto real estate agent to lead you properly through the selling or buying process.

Different Market Trends

Each city, county and state has its own real estate market which includes its own distinctive buyers, sellers, and related trends. And of course, different rules and regulations are running the housing market in each area. We have three main terms to define the real estate market trends and environment. Buyer’s market, seller’s market and balanced market.

Buyer’s Market

The buyer’s market means there are more properties for sale than there are buyers. This situation gives the buyers more negotiation power, it means home buyers have the upper hand and more choices. This could be the best time to buy a property because the prices are lower.

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Seller’s Market

The seller’s market means there are fewer listings than there are buyers. This situation creates more competition among home buyers and may result in bidding wars or longer home search time than expected. This could be the best time to sell a property because the inventory is limited and new listings will sell quickly.

Related Article: The Home Sellers’ Most Frequently Asked Questions

Balanced Market

On the other hand, a balanced market means the home buyers and home sellers are at the same level. In this situation, the listings for sale are equal to the demand. It means none of the home buyers or sellers has more advantage. So, when the number of listings for sale is the same as buying demand, there will be no steep rising or falling in house prices and either sellers or buyers do not have much negotiation power over the other side.

Effects of balanced market on Toronto home buyers and sellers

Generally, in a balanced real estate market, Toronto home buyers are more willing to offer reasonable prices and Toronto home sellers are more willing to accept. Because the home price in a balanced market either remains stable or grows steadily. So, it seems buyers have more opportunities in a balanced real estate market in the GTA. On the other hand, sellers should take reasonable steps to get their homes ready for sale and satisfy the potential home buyers as much as possible.

Maybe you can sell an old house overnight without doing the best home improvements before resale in the seller’s market, but it is impossible in a balanced market. Because normally in a balanced market the sales to new listings ratio (SNLR) is approximately between 50 and 60%, showing a relative balance in supply and demand levels. In this case, there will be almost a six-month supply of homes. Since the number of listings is more than buyers, the housing market is starting to slow.

For example, in October 2020, Toronto real estate market experienced a balanced market condition with 3,514 sales and 7,823 new listings. By the time, the SNLR was 45% and the competition level in the housing market has stabilized since October 2019. It seems it happened due to a decline in condo market activity during the pandemic. Different factors can create a balanced market, including the interest rates, the number of new construction projects, inflation, immigration or even employment.

What should buyers and sellers do in a balanced market?

Normally, after all the consultations with your agent and when you make sure of finding your dream house, as a buyer you will encounter a bidding war with multiple offers. In such conditions, you must act fast or you’ll lose the house. However, in a balanced market, there’s no need to act fast. Everything is at a steady pace and the atmosphere of transactions is more relaxed. The number of potential buyers and listings are equal, and the sellers tend to consider listing their house at a lower price. So, this condition of increased listings and moderate prices can benefit home buyers.

On the other hand, if you need to sell your house in Toronto during a balanced market, you need to consider some important tips to avoid losing money and to sell your house faster. In fact, as a Toronto home seller, you may need to try a little harder to sign the sale contract and sell your home in a balanced market. Remember, when the prices are stable you should set a proper selling price to get potential buyers through the door. Pricing your house correctly in the balanced market of the GTA is a key criterion.

Pay attention to your curb appeal, show your house off! Certainly, the manicured lawn and beautiful flowers will pull in more potential buyers. Don’t wait for the buyer to ask for a home inspection when they make an offer. Prepare a pre-listing inspection and have the inspector’s report handy. If you want to sell your home fast, check the 3-5 must-fix things before listing. If it is possible, fix the most necessary items by yourself or get a handyman to get the repairs done.

Related article: Important Tips to Increase Your Home Value Before Selling

Declutter your home, get rid of every unnecessary thing before listing the home. Trash or store the useless items, this will make your house seem larger. To stand out from the housing competition, you better add a special incentive, like prepaying taxes or an appliance warranty. All these factors can help you sell your house faster in a balanced market.

Conclusion

In the end, whether you are going to buy or sell a Toronto property in a balanced real estate market, you will need a professional Toronto real estate agent. Your agent knows the market better than you and can help you to prepare the best marketing plan and to generate as much interest as possible.