One of the most common questions in real estate is: "When is the best time to list my home for sale?", to which the response is hardly ever a specific one. It's common to hear answers like "in the summer” or "during springtime", which are both blanket answers that are not necessarily wrong. However, this article will provide a deep dive into past data in an effort to determine a historically-backed, number-driven answer, or rather reference point, for the best time to sell a home in Toronto. As such, this article can act as a guide for Toronto homeowners trying to make the decision of when to list their home for sale.
History often repeats itself and Toronto’s real estate market is no exception. In order to determine market performance in the foreseeable future, we will be diving into the sold statistics of Toronto real estate from 2003 to 2019. Studying several key indicators such as selling prices, total listings, total sales, days on market, and more, will give us the pieces needed arrive at the best time to sell a home in Toronto. It's worth noting that we held off on including the year 2020 given the atypical nature of the market due to the effect of the COVID-19 pandemic.
Time of year with the highest Sold-to-List Price ratio: March to April.
The lowest days on market throughout the year: April.
Month with the highest number of listed and sold properties throughout the year: May.
Months with the highest average sale price in the year: May & September.
Real estate is usually cyclical but at times certain events can take place that causes market dynamics to shift. So you should keep an eye out for what’s selling at a premium at any given time.
In conclusion, listing between the months of March and May would be considered the best time to list a Toronto home for Sale.
1. Sold Price vs List Price
The Sale Price to List Price Ratio (SL/LP Ratio) is one of the best stats to determine how "hot" a real estate market is. This ratio is calculated by dividing the sold price by the list price of a home and is usually expressed as a percentage. If it’s above 100%, then the property was sold over the asking price (also known as the list price). If it's below 100%, then the home was sold below the list price.
When selling a home, it's important to know how the market is performing. Looking at a neighbourhood or Toronto’s recently sold homes to discover the average sold-to-list price ratio can help you determine the strength of the market. This demonstrates how much home buyer demand there is and how much over the asking price they are willing to go. The higher the sold-to-list price ratio, the more likely you are to get offers on your home around or over your asking price.
After analyzing and plotting the historical sold statistics for Toronto real estate. We can see in the chart below that, March to mid-April has had the highest sale-to-price ratio. With the month of March being the most consistent month to have an SP/LP higher than 100% by a at least 1% percentage point.
Word of caution: In really hot markets, like the Toronto real estate market, one of the selling strategies is having what is called an Offer Night. This tends to skew the SL/LP ratio, since properties are listed at a price much lower than asking (even for just $1!) to attract buyers and then sell for much higher than the list price. This causes the averaged market data for the ratio to become less reliable. However, rest assured, if there are a lot of offer nights - that is usually already a sign of a hot market.
2. Average Days on Market
Another important statistic when analyzing the health of the real estate market is the average number of days on market. Days on market is a numerical value that simply states how many days a property stayed on the market before it was sold. So looking at the average number of days properties in a certain area have stayed on the market, points to how much demand there is. Understandably, the lower the average number of days properties stay on the market, the higher buyer demand is, with the opposite (more days on market) pointing to a less desirable area.
It's always a good idea to look at the average number of days on the market for your area or Toronto neighbourhood to see how the market is performing. If you see that homes are selling within 7 days on average during a certain time frame, then you have a little more direction of when might be a good time to list your home for sale. So what does the history of average days on the market tell us?
Based on the above-consolidated statistics for the Toronto market from 2003 to 2019, it seems like April to May is the best time of the year to sell your home fast, as those months have had the lowest average days on market throughout the 17 years of analyzed data.
3. Number of Listings - New & Sold
Another factor to take into consideration when deciding when to list for sale, is the current number of listings (especially comparable properties) and how many more listings are expected to come up for sale in the near future. This lets you know how many competing homes there are to yours and how your property will stand out amongst the crowd. The more comparable homes are up for sale, the less likely your property would be a home buyer’s number one choice. The fewer options buyers have, the more likely your home will be memorable among the smaller crowd.
A quick glance at the number of listings currently for sale in your neighbourhood would let you know the current potential competition. However, to predict how many additional homes may come up for sale after yours, since other homeowners could be waiting for the right time to sell as well, it’s best to look at the past. Below are two charts, the first showing when homes are usually listed and the second displaying when homes are usually sold.
By looking at the data above, we can see that the month with the most new listings is May and the time with the least number of new listings is the end of December.
Comparatively, May is also the month with the highest number of sold listings, with December recording the lowest month of sales consistently. This demonstrates the seasonality of the Toronto real estate market - most homes are listed in and sold during the Spring and Summer season starting from March to June. With the least homes sold during the winter months from November to February.
4. Average Sale Price per month
The average price of homes can change a few percentage points in just a few months. Certain things can happen that could cause one month’s demand to increase the average price of homes above the norm (e.g a new government incentives, new mortgage news, etc.). So it's also good to keep an eye on the average sale prices for homes in your area. Previous years may let us know what to expect but current times are always a good predictor.
Based on the data plotted below, historically May and September usually have the highest average sale price in the year, consistently.
Word of caution: Keep in mind the average sale price is dependent on the prices of homes being sold divided by the total number of homes sold. There can be times where the average sale price is low due to a recent event. For example, new rent regulations which cause investors to sell a lot of their one-bedroom condos. Since these smaller condos would be lower on the price spectrum, this would bring down the average sale price. The opposite also happens when there is a housing craze and a lot of sellers decide to sell their more expensive houses, causing the average sale price to increase.
5. Comparable & Recently Sold Listings
Real estate is usually cyclical but at times certain events can take place that causes market dynamics to shift. Such as what happened during the global pandemic in 2020, as quarantine and work from home became more apparent - home buyers became more interested in larger spaces with outdoor features. Resulting in more demand for houses and cottage properties. This caused cottages to sell for 100s of thousands above the asking price and in a matter of days. Whilst at the same time demand for smaller sized condos plummeted.
Here's a chart from Google Trends showing the search interest for "Cottages for sale" in Ontario throughout 2020:
So it's always good to keep an eye out for what’s selling at a premium at any given time - if you have a loft and there is a loft craze happening, it might be time to think about selling your Toronto loft.
Timing when to sell your home is an essential factor to avoid prolonged days on the market and to get the highest price point. Yes, historically data may assist with making the decision but current market conditions also play a critical role in determining the success of your Toronto home sale.
Knowing exactly when to sell your home in Toronto is challenging and we hope that this guide will make that decision a little bit easier. And if you are still unsure of when to sell your home, you can also get expert assistance when you sell with dwelly. Message us via our live chat on dwelly.ca.