I love that play on words. But then again, part of me is stuck in the ’90’s…
January 20th. That’s the day. It’s almost science!
That’s the best day of the year to buy a home, and I’m not just saying this because, well, today happens to be that very day!
Does anybody remember the article that showed up in Toronto newspapers one year ago? Let’s take a look at it, and discuss the pros and cons of buying a home in January…
Okay, what the hell, I’m in the mood…
Free $50 Home Depot gift card to the first person who can post in the comments section below:
1) The name of the song I’m referencing as it appears on the album.
2) The album name.
3) The name of the lead singer’s 2001 side project band that played at Kool Haus in Toronto.
If you can get all that correct, without the help of Google, then I applaud both your love, and obsession, of 90’s and early-2000’s alternative music…
So with that said, did you know that today is the greatest day to buy a house?
It’s true. Sort of. Depends…
A lot of buyers were enamoured with this article from last year’s Financial Post:
Read the article, and decide for yourselves whether there’s merit to the hypothesis, or whether it was just a marketing gimmick by folks at TheRedPin.
I have numbers of my own that I’d like to explore, and while the “average sale price” is a metric that has merit, I want to look at the sales to listings ratios.
Why sales to listings?
Well one of the decisions a buyer has to make is whether they want more choice and inventory along with more competition, or whether they want a historically lower average sale price.
It’s like anything else in life, I suppose.
Personally, I don’t see the value in waiting in line for food. Every Sunday, I see these suckers outside “Petit Dejuner” on King Street, who will wait in (-8) degree temperatures, for an HOUR, to go inside and eat brunch.
I’d rather walk down to “The Jason George,” sit at the table with my back to the fireplace, and order food that I think is just as good, and by the time I have arrived, ordered, eaten, and finished, I walk back up to King Street and past the Petit Dejuner, the folks who were at the back of the line are now at the front.
Maybe I’m just busier. Maybe I just value my time more.
Or maybe I’m wrong, and those folks are getting more enjoyment out of life. Who knows…
But with any product or service, you have to balance the value, the price, the time, the hassle, the competition, and in the end, find a happy medium.
If you’re a home-buyer in the January market, and you have two options in a given week, but you want to have twelve, then you should probably wait until May or June when, historically, there is far more inventory.
But if you’re going to be in that market, with far more inventory, there’s going to be far more competition as well.
Let’s look at the ratio of sales to new listings, and sales to active listings, from January to June of last year. The ratio of sales/listings are in parenthesis.
9,596 New Listings (45.4%)
11,600 Active Listings (37.5%)
10,503 New Listings (60.3%)
12,793 Active Listings (49.5%)
14,829 New Listings (59.3%)
16,543 Active Listings (53.0%)
18,117 New Listings (62.4%)
17,182 Active Listings (65.8%)
18,697 New Listings (62.6%)
18,585 Active Listings (63.0%)
17,746 New Listings (67.6%)
17,972 Active Listings (66.7%)
The numbers tell the story, do they not?
The only outlier I see here is that the February ratio of sales to new listings was over 60%. Usually the difference between the sales-to-new-listings ratio and the sales-to-active-listings ratio is a lot less than the 10.8% we saw in February. It’s around 1% in April/May/June.
And amazingly, the sales-to-active-listings ratio was bigger than the sales-to-new-listings ratio in both April and May.
That literally is an example of “we sell this stuff as soon as it gets through the door.” Listings couldn’t come fast enough in those months!
So if the market is that competitive in May and June, and if there’s a lower proportion of sales to listings in January, then why doesn’t everybody look in January?
Plain and simple.
It’s a bit of that “double-edged sword” philosophy.
There’s eighty percent more new listings in May/June than in January.
There’s far more choice, and in this market, people want choice.
With this big a decision at stake – buying a $700,000, $1 Million, or $2 Million house, people want variety, and they want choice.
January is like this:
May and June are like this:
At the end of the day, it’s up to the buyer to decide where the value lays.
Do you want to buy the only product left on the shelf, at a discount?
Or do you want a selection, and know you might pay more?
I can’t say there’s a right and wrong here, but if, apparently, January 20th is the best day of the year to buy a property, then you – reading this, right now, might want to think about it…