Ok, what is happening the last few days!!
The media is confusing buyers & sellers on the new homebuyer tax!
Here is a simple explanation to all the confused friends who called me over the last few days.
A balanced real estate market usually has about 3-4 months of inventory at this time. This
reduces the bidding wars and brings more supply & options to the buyers.
Over the past 6 months, we have been struggling with inventory levels. We had around 5 weeks of inventory, max. What does this mean? This means, that if we don’t list any properties for 5 weeks, and sell at the same pace, we will run out of homes.
How's the Market?
Now there has been a lot of talk about the great slow down in Toronto Real Estate over the last few weeks. Surely inventory must have hit 5 or 6 months of supply right?
Here’s what inventory looked like in February vs March.
Months of inventory:
As usual, inventory is UP for Spring but still not enough! We won’t see the same amount of multiple offers as we have seen in the last year or so. But homes are still selling. Demand continues to be strong and even in the last two days, it has eaten into supply.
We are back into a typical real estate cycle.
Comparing it to last year’s volume is not the right way to go. 2021 set a record for sales in the GTA. Comparing March activity to a normal March (pre-pandemic) is more of an apples-to-apples comparison. If we hit 7200-7800 sales, we are on pace for a great end to the first quarter. Although supply is higher than in previous months, it is still extremely low.
Home prices won’t show 20-30% increases any more, so they need to be priced right and priced for today’s market. That said, we will see modest growth in terms of price. I’m not buying into the 25-40% declines. An emotional purchase in a bidding war does not change market value all of the sudden. Basing sales off true market value is how to determine price gains/losses. Market value is not determined by a handful of homes that went to the highest bidder because they were tired of losing out in multiple. offers.
Demand is out there and it is going to increase once immigration kicks into gear. We need supply to increase to bring about some balance to the market. We need supply NOW! Without supply, guess what’s going to happen?
Strong demand + low supply = price