Reading those headlines in the "news" can be stressful or confusing for many of you. I know it is pretty frustrating for me personally given the lack of facts, the amount of hyperbole, and the manipulation of information to suit the narrative.
It is time to share truth, facts, wisdom and knowledge. My goal is to educate you for your sake, as well as your friends and family's sake. There is no need to panic! Everything is actually fine. Take a breath and read on...
Inventory - yes, it's true, there are more listings on MLS than there have been in years past.
Let's examine that though, shall we?
Beginning with the definition of the different types of markets:
- Buyer's Market = 6 months or more of inventory
- Seller's Market = 4 months or less of inventory
- Balanced Market = YOU GUESSED IT! Between 4 and 6 months of inventory
A buyer's market is clearly more favourable to buyers and a seller's market is more favourable to sellers. So where do we stand in terms of inventory?
Surprise! Surprise! A seller's market! Yes, that is right! I know you have heard otherwise. Please allow me to explain what is (f)actually happening and back it up with statistics and facts.
For the month of June 2022, inventory for all listings on MLS (including condos) was at 2.49 months of inventory.
How does that compare to previous years?
June 2017 2.5 months of inventory
June 2018 2.6 months of inventory
June 2019 2.22 months of inventory
June 2020 1.61 months of inventory
June 2021 1.02 months of inventory
What was the average price for all MLS sales in each of those months?
June 2017 $793,915
June 2018 $808,066
June 2019 $832,703
June 2020 $931,131
June 2021 $1,089,536
June 2022 $1,146,254
As you can see, from these numbers:
- We have been for years and continue to be in a seller's market currently.
- Prices are up overall since 2017.
- We don't have a huge supply of inventory and even less so of good and appropriately priced listings.
Having said that, the trend over the last 4 months has been that of a shifting market. In February 2022, we had only .77 months of inventory (let's call that an extremely favourable market for sellers) which was a huge factor in the average sale price rising to $1,334,544.
That growth was unsustainable. If you sold in February, congratulations!!! If you bought, fret not, the market will go back up eventually. And remember that real estate is meant to be a long-term hold. Having said that, if you purchased a home in the last 5 years, in most cases, your property value has likely already gone up.
Supply and demand are always going to be the most important factors in the real estate market. While it is true that there are factors such as interest rate hikes and buyer fatigue that are affecting demand and therefore placing downward pressure on pricing, I am confident that this is a temporary situation.
Interest rates will continue to rise, but so will the number of immigrants coming to Toronto. Supply is still too low to satisfy the demand. Buyers taking a break and waiting to see where prices go will find that if they wait too long, they will miss an opportunity to buy during this period.
Sellers who are trying to sell at February's prices will have to readjust their thinking. Buyers looking for the bargain of the century will also have to readjust theirs.
Each individual is different just as every home is different. Given that, you each need information and advice based on your specifics. If you would like to discuss your immediate real estate questions and needs, please reach out to me directly at daniellagoldre@gmail.com or call me (or text) at 416 820 3006.
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