Anyone keeping a close eye on Toronto’s real estate market might find the sales statistics published by the Toronto Real Estate Board this year a bit puzzling.
For example, anyone looking at the change in sales each month in 2014 vs 2013 would conclude that the market got off to a slow start in 2014 and only started to pick up on May. They might also conclude that the demand for homes was a lot higher between May and July than it was between January and March of this year.
If we also look at the sales-to-inventory ratio we see a similar story. The sales-to-inventory ratio is typically used to measure the relationship between demand (sales) and supply (inventory) in the market. The higher the ratio the more competitive the market is. Looking at the sales-to-inventory ratio for 2014 would lead us to believe that the market in July was more competitive than it was in January and February and only slightly more competitive than it was in March.
The problem with both of the above narratives is that they don’t actually reflect what we observed happening in the real estate market. The real estate market between January and March of 2014 was fiercely competitive with the majority of houses getting no fewer than 10 offers on their offer night. In contrast, the market has slowed down significantly during the summer months with houses staying on the market longer and fewer houses getting bidding wars. When a house does have multiple offers they are more likely to get 2-4 offers rather than the 10+ most were getting earlier in the year.