Inventory is growing and sitting longer

Finishing the first quarter of the year, the average home in Toronto is spending more time on the market then it did last year, and as a result, there are more homes available in relation to sales. Since mid-2017 the average days on the market (DOM) has been growing year-over-year for in Toronto. This has been accompanied by the growth of months of inventory (MOI) available for prospective buyers. Not surprisingly, these conditions have been successful in holding average home prices in check.

DOM AprSource: TREB, Six Housing Sense

The city is continuing to rebuild its inventory from the high sales and higher prices that started 2017, as since that time the housing market has been slowing down. From the graph we see that the average DOM remains below 2014-16 numbers, but it has grown year-over-year for two years now. While the detached market slowed first, the condo sector followed suit by the end of 2017 and since has also been steadily adding inventory, if slowly.

Detached DOM aprSource: TREB, Six Housing Sense

Toronto’s detached market currently finds itself with its highest levels of both days on the market and months of inventory in years. After dropping in 2017, 2018 posted five-year highs for nearly every month, and to start 2019, all three months have continued this trend. This has been equally true for months of inventory. Monthly MOI figures have been consistently growing and now sit well above the recent average. These numbers help to explain why detached houses prices have been stagnant for almost two years.

Detached MOI aprSource: TREB, Six Housing Sense

In comparison to the detached market, Toronto’s condo market has a shorter average monthly DOM figure, as well as far tighter months of inventory numbers. That said, even condos inventory levels are showing growth, and with sales falling for condos lately, that could make the spring season intriguing.

Condo DOM aprSource: TREB, Six Housing Sense

In 2017 and 2018 the condo market experienced a steep drop in the length of time a listing stayed on the market thanks to limited inventory. After years of a relatively balanced condo market, demand and prices soared. This tightened the market and sped up turnover. To start 2019 the growth has not been huge but steady improvements are being made.

Condo MOI aprSource: TREB, Six Housing Sense

Due to weaker condo sales to start the year, months of inventory stats have been growing by wider margins over 2018. Again, though inventory remains lows, consistent growth is taking shape and should sales continue to fall, greater balance should return to the condo sector.

Considering how slow the detached market has been for two years, the continued increases in DOM and MOI point to a sector that remains balanced, and possibly even favours the buyer. The condo segment is improving but still restricted. However, with its sales volumes sliding with each passing month, it could quickly find itself in a similar situation as detached homes.

At these numbers, inventory levels remain competitive, and though listings are staying on the market longer homes are still moving quickly. It was a cold winter with lots of snow, which according many realtors prevents people from buying homes (that seems debatable in Canada). Perhaps that is why days on the market and months of inventory stats grew, but with spring finally here, we will find out if that is true or not.

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