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SALES
TO NEW INVENTORY:
In
a seller's market, there are more than 0.60 sales for every new
listing. In a buyer's market, there are less than 0.40 sales for each
new listing. (Or more intuitively, less than 40% or more than 60% of
new listings are selling.)
0.60:1
is only slightly better than half of the new listings selling, but
it's a higher number than it first appears to be.
If
the ratio was 1.0 sale per new listing, it would mean that every
house that came onto the market was selling, no matter the condition
of the house or the price. In reality, there are a lot of problem
houses, and problem sellers, and problem prices, and those houses
don't sell.
Roughly
10% of listings expire, instead of selling, because of problems with
the price, the house, or the seller. That leaves the non-problematic
houses with a top end of 0.90:1 .
Even
in a hot market, there are honest realistic sellers with well-priced
houses that just won't sell. The buyers looking at houses in that
price range, in that neighbourhood, at that time, just don't like it.
They
say there's a buyer for every house. Sometimes, though, your buyer
isn't out shopping when you want to sell. Another 10% of houses on
the market fall into that category.
Even
in a really hot market, the top end of the sales to new inventory
ratio is more like 0.80:1, than 1:1.
On
the flip side, where it trips over into a buyer's market, 0.40
doesn't sound that far from 0.60, so why the big deal?
Imagine
a market where only 20% of new listings would sell. That would be a
0.20:1 ratio. The Great Depression wasn't that bad. Even in
recessions, people still need a place to live, and still have reasons
to buy a house when nobody else is.
The
buyer's market ratio bottoms out around 0.30:1 I'm guessing.
The
top and bottoms of the market is more like 0.80:1, and 0.30:1. The
distance between 0.60 and 0.40 doesn't seem so small in that context.
During
2007 Barrie was in the over 60% seller's market range. During 2008,
it weakened, but still was higher than a buyer's market. In January
2009 things changed dramatically, and the ratio dropped to 0.30:1.
That's definetly a buyer's market statistic, but it's also close to
that Depression scenario. |
