What does Sales to Active Ratio (SAR) mean?
SAR, also called 'list to sale ratio', is the percentage of available listings that have sold. A higher SAR means a larger portion of the available listings has sold, which indicated the buyer demand, or strength, of a particular area. As defined by the Vancouver Real Estate Board, SAR of 20% or higher indicates a seller's market, where there are more people looking to buy then there are homes available. If you’re listing a home in an area with a minimum of 20% SAR, you’re in a good position to sell!
Given the slower real estate market of late, it’s also important to know that the 12% - 20% is still considered a balanced market. A balanced market occurs when supply and demand are about the same, with home prices rising in line with the long-term average rate of inflation.
On the flip side, a buyers market is typically less than 12% SAR, meaning there are more homes for sale in that area because a smaller percentage of the available listings are selling. These are great areas to watch if you’re in the market for a new property.
SAR can be a great indicator, but keep in mind there are many factors to consider when buying or selling.
In summary….
Seller's market
A seller’s market is when there are more people looking to buy then there are homes available. This causes a rise in price above the long-term average rate of inflation. Typically this is indicated by a sales-to-active listings ratio of 20% or higher.
Buyer's market
In contrast, a buyer’s market is when there are more homes for sale than there are buyers. As a result, prices typically either decrease or increase at a pace below the average rate of inflation. A buyer's market occurs when the sales-to-active listings ratio dips below 12%.
Balanced market
A balanced market occurs when supply and demand are about the same, with home prices rising in line with long-term average rate of inflation. Typically this is indicated by a sales-to-active listings ratio between 12% and 20%.
Source | Real Estate Wire(REW)
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