Last week, the Toronto Real Estate Board released its February 2014 home sales figures for the Greater Toronto Area (GTA). We saw a moderate 2.1% up-tick in sales this past February despite the extreme weather and a pervasive shortage of listings in the low-rise segment. The pace of average price growth was extremely brisk year-over-year at 8.6% – well above the rate of inflation.
One of the key drivers of real estate price growth is the relationship between listings and sales – the economics of supply and demand. So one of the metrics we use in the Toronto real estate market is to look at months of inventory (MOI). To calculate this, we would look at active listings at the end of a given month and divide that by the sales that we saw during the month. Months of inventory gives us an idea of how long it would take to deplete the standing inventory given current market conditions. This February, the Toronto Real Estate Board saw MOI at 2.5 (down from the same period last year) – this firmly entrenches us in a Sellers market. At least 4 months of inventory is required to have a balanced market.
As inventory levels coming out of the 2008 recession have been lower than what we’ve been used to in years before, the Toronto real estate market continues to experience an upward pressure on selling prices and intense competition among buyers. Low-rise listings will remain constrained this year – so that will keep months of inventory low throughout 2014.
If property owners in this market are considering selling, now is definitely the time to capitalize on building equity from the sale of their property while investing in their future. If they are looking for exceptional market and investment knowledge, along with that element of professionalism and being catered to that comes from paying attention to every detail, I can help – please fill out the form below and I will connect with you shortly.