Start­ing with its Novem­ber 2011 Mar­ket Watch pub­li­ca­tion, the Toronto Real Estate Board (TREB) has been pub­lish­ing a new Months of Inven­tory (MOI) indi­ca­tor. MOI shows how long, on aver­age, it would take to sell all actively listed homes assum­ing the level of sales remained the same and no addi­tional homes were listed.

When the MOI trends down­ward, the mar­ket is tight­en­ing with fewer list­ings from which buy­ers can choose. Gen­er­ally speak­ing, tight­en­ing mar­ket con­di­tions trans­late into more com­pe­ti­tion between buy­ers and more upward pres­sure on the aver­age sell­ing price. When the MOI trends upward, the oppo­site would be true: com­pe­ti­tion between buy­ers will ease and the rate of price growth will likely moderate.

The aver­age MOI was 2.3 months over the last two years. In the years lead­ing up to the reces­sion (2000 through 2007) the aver­age MOI was 3.0 months. In response to tighter mar­ket con­di­tions, the aver­age annual rate of price growth was stronger in 2010 and 2011 in com­par­i­son to much of the pre-recession period.

“The low months of inven­tory over the past two years resulted from very strong sales rel­a­tive to the num­ber of homes listed. In 2011 in par­tic­u­lar, there was a short­age of list­ings in the GTA. We con­tinue to expe­ri­ence tight mar­ket con­di­tions and con­sid­er­able upward pres­sure on the aver­age sell­ing price,” said TREB Pres­i­dent Richard Silver.

“The strong price growth we have seen over the last two years has largely been mit­i­gated by low bor­row­ing costs. TREB’s afford­abil­ity indi­ca­tor shows that a house­hold earn­ing the aver­age income in the GTA can com­fort­ably carry a mort­gage on the aver­age priced home, based on cur­rent lend­ing stan­dards,” con­tin­ued Silver.

Based on the cur­rent mar­ket tight­ness and pos­i­tive afford­abil­ity pic­ture, TREB expects the aver­age sell­ing price to con­tinue grow­ing in 2012.

“Bar­ring a reces­sion in Canada, the aver­age sell­ing price is expected to grow by approx­i­mately 4% in 2012 to $485,000 dol­lars. This price will remain afford­able based on cur­rent lend­ing stan­dards. At the same time, the lower rate of price growth in com­par­i­son to 2011 points to an eas­ing of sell­ers’ mar­ket con­di­tions in the sec­ond half of this year,” said Jason Mer­cer, TREB’s Senior Man­ager of Mar­ket Analysis.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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