According to statistics from the Toronto Real Estate Board, the GTA was a seller’s market with an average of only 36 days of inventory by the end of 2016. To put this in perspective, a market is considered to be in a seller’s market—where conditions are far more favourable for the seller—if there are 120 days of inventory or less.
Now, the theory with MOI is that a house will sit on the market for longer when competition isn’t as fierce and when conditions favour home buyers. This is also the reason for seasonal affects in real estate—year after year house prices, on average, drop in the winter months when compared to hotter selling months, such as April and May.
To help illustrate the impact of demand on home prices, TheRedPin, analyzed Toronto housing sales data for the last six years (ending in Q3 2016). TheRedPin found that the selling price of a home sold in January was, on average, $60,000 less than a home sold in May. The MOI ratio showed that, on average, it took 29 days to sell a home in January in the GTA, versus 18 days during the spring selling season.
Most recently, this current lack of housing inventory in the GTA helped push prices up. Between November 2015 and November 2016, the average selling price of a GTA home rose to $776,684—up 22.7% on a year-over-year basis.
And there is no expectation of a sudden change in inventory in any of these markets. This means it will continue to be a seller’s market in the Greater Toronto Area.
If you’re considering the sale of your single family detached, semi-detached or row home in the Greater Toronto market than 2017 may be the year. All predictions suggest that the tight demand will allow prices to continue to climb, despite recent mortgage regulation changes and the threat of higher interest rates. So, unless there are major changes in demand and supply or shifts in the economy, sellers in the GTA can expect bidding wars and further price escalation during the hotter buying seasons in 2017.