Toronto Housing Inventory

Recent posts of ours have ended by discussing the importance inventory levels will have on Toronto real estate prices in 2019. With this in mind, this piece looks at inventory levels in Toronto over the past five years to see how 2018 fared and to determine what it might mean for 2019. To do this we will examine months of inventory (MOI) levels, which is a comparison of sales to active listings.

detached moiSource: TREB, Six Housing Sense

From the detached market we see that 2018 had the highest levels of inventory in the past five years. The current level has been relatively steady since June 2017, meaning the detached market has had elevated inventory levels for over a year and a half in comparison to recent years. These totals remain far from high; however, they do suggest more options for buyers, which has helped to, and will likely continue to control prices.

condo moiSource: TREB, Six Housing Sense

On the other end of the spectrum is the condo market, where inventory levels are much lower. In comparison to the past five years, 2018 was the second lowest, only slightly above 2017 and the latter half of 2016. With MOI numbers consistently staying under two months of inventory for the entire year, this represents very tight supply, thus supporting the high condo prices the city is seeing.

yoy moiSource: TREB, Six Housing Sense

Reviewing the months of inventory numbers for their year-over-year performances, we see that MOI levels for both the detached and condo markets were declining until March 2017. At this point the detached market experienced strong year-over-year gains, with MOI more than tripling in some months. The condo market was delayed a few months before it saw gains in July 2017 that peaked with MOI doubling by March 2018. Over the course of 2018 each market began performing in line with 2017, with both ending the year up slightly by December.

5y avg moiSource: TREB, Six Housing Sense

The final graph shows monthly performance against the five-year average for that month. From this comparison we see that the MOI for the condo market has fallen sharply over the last two and a half years. While the number is getting closer to the five-year average, overall MOI for condos remains quite low. Once again the detached market is behaving differently from the condo. Detached homes saw shrinking inventory levels from 2014 to the spring of 2017 before a dramatic rise that timed with the price peak in May 2017. For more than a year and a half now, detached MOI has been well above the five-year average, and appears to be trending higher.

Moving into 2019 we see a similar situation that awaited Toronto for 2018 with perhaps some movement in the buyer’s direction. The detached market shows greater balance, with a healthy though not overwhelming amount of inventory. MOI did trend higher by the end of 2018, however, so further power could be shifting to potential buyers. Whereas the condo market remains tight and continues to favour the seller overall. That said, 2018 showed a consistent, albeit moderate rise in MOI throughout the year for condos. This could be pointing to a healthier condo market in 2019.

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