A Glimmer of Hope for Toronto Home Buyers

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board’s November Market Watch report showed the first sign that some relief might be on the way for Toronto home buyers.

Every month this year prior to November experienced a decline in the number of new listings coming on the market.   In some months the decline in new listings was as high as 30% over the previous year.  This decline is one of the factors driving the imbalance we are seeing between the demand and supply for homes in the Toronto market.  November marked the first month this year where we did not see a decline in the number of properties coming on the market.  The number of new listings remained flat when compared to the same month last year.

 

But the overall inventory (total number of homes available for sale) for the market continues to be well below historical levels.

For the third straight month we experienced a record number of home sales.  Sales in November outpaced the previous November record set in 2007.  

 

The sales-to-inventory ratio declined slightly but still remains in Seller's market territory.

 

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy Realty focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions.

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Comments

[Jordan]

John, I find it interesting that except for a few months from last winter and this past spring, Toronto has been pretty firmly in "seller's market" territory continuously for the last five years!

[cristine]

Hi John,

What do you think about the ratio of a house sale price over MPAC assessment value.
Do you have any advice.

Thankyou

[brent berry]

I'm wondering why the price to sales to inventory data you present vary so much from what is in this RBC report:

http://www.rbc.com/economics/market/pdf/house.pdf

Also, why does your balanced market vary from theirs?

thanks,

[John Pasalis]

Cristine,

It depends on how you plan on using that ratio. I don't think it tells you very much about the state of your local real estate market. Regardless, I would use it cautiously because MPAC assessments are not always accurate.

Brent,
The sales-to-inventory I use in my analysis looks at the total number of sales in a given month divided by the total number of homes available for sale in that month - independent of when a home was originally listed for sale. So the inventory number I use in my calculations includes houses that were originally listed for sale in a previous month.

The RBC report looks at the total number of sales divided by the total number of new listings coming on the market in that month. So their sales-to-new listings ratio for November would only include houses that were originally listed for sale in November.

I prefer to use the sales-to-inventory ratio for a number of reasons. The main reason is that I feel it does a better job of representing the market dynamics in any given month. Houses take on average around thirty days to sell. If we see a big increase in new listings in October, many of the houses will spill over and still be available to buyers in November. The Sales-to-inventory ratio I use captures these spill over effects, the sales-to-new listings ratio does not.

Having said that, I do think it's important to look at both measures to really get a sense of what's going on in the market today.

[lipstickonapig]

Quote from the November 2009 TREB market report:

"Greater Toronto REALTORS® reported 7,446 sales in November"

“This year in the GTA home sales will be in line with the healthy levels experienced between 2004 and 2006,” said Toronto Real Estate Board President Tom Lebour.

Quote from the November 2007 TREB market report:

"Best November Ever"

"A record-breaking November saw 7,313 sales"

Hmmm, if November 2009 had more sales than November 2007, wouldn't that have made November 2009 the best November on record???? I wonder why they neglected to emphasize this obvious fact...any thoughts John?

These TREB guys are something else...