While numerous lawn signs reading “over asking” or “sold in 3 days” may nudge you into thinking you’re in the midst of a seller’s market – technically speaking, there’s a better way to know.
Months of inventory, or MOI for short, is deemed as the most accurate way to pin-point whether a market is in favour of sellers or buyers.
Found by comparing home sales versus how many listings are currently on the market, MOI essentially asks the question: How long would it take for every single property to get snapped up by buyers if no new homes were put up for sale?
The basic rule of thumb around months of inventory is anything below four months is considered well in seller’s market territory, while anything above six is a sure-sign of a buyer’s market.
Months of inventory between five and six months signals balanced conditions.
So where does Toronto and its surrounding suburbs rank in all this? According to the latest figures for 2016, months of inventory sits at a record low 1.6, meaning it would take less than two months for all currently listed homes to sell across the GTA.
That’s on the extreme end of the seller’s market range.
Based on the latest numbers, Ajax, Whitby and Oshawa were home to the strongest seller’s markets, outpacing Toronto. The same cities also saw the most over asking sales in a previous analysis from TheRedPin.
A big reason why these suburbs are hot comes down to buyers who are on the hunt for single-family homes being pushed out of pricier Toronto and York neighbourhoods and as a result, flocking further east toward Durham. Plus with the Highway 407 expansion and GO Train infrastructure, the area is ideal for commuters.
The dearth of housing inventory is a theme that persists from city-to-town in the GTA however, as last month alone, the number of active listings on the market plummeted by thirty per cent while on the inverse, sales actually climbed by ten percent.
Across the GTA, not one city saw months of inventory above four – meaning every major area sat within seller’s market territory. Brock and King City saw the highest months of inventory at 3.8 and 3.4 per cent respectively.
Low months of inventory means supply is low, demand is high and prices are climbing upwards.
Below we’ve pin-pointed the cities in the GTA where MOI is lowest (for family houses and condos combined) and seller’s market conditions are out in full-force.
Median Price 2016: $582,500
YOY Price Increase: 26.6%
Median Price May 2016: $570,000
YOY Price Increase: 17.5%
Median Price May 2016: $425,000
YOY Price Increase: 25%
Median Price May 2016: $731,000
YOY Price Increase: 25%
Median Price May 2016: $430,000
YOY Price Increase: 14.9%
Median Price May 2016: $580,550
YOY Price Increase: 17.3%
Median Price May 2016: $853,000
YOY Price Increase: 26.9%
Median Price May 2016: $560,000
YOY Price Increase: 19.1%
Median Price May 2016: $608,643
YOY Price Increase: 16.2%
Here is months of inventory for other major GTA cities:
Median Price May 2016: $928,000
YOY Price Increase: 20.5%
Median Price May 2016: $996,500
YOY Price Increase: 23.1%
Median Price May 2016: $882,000
YOY Price Increase: 20.8%
Median Price May 2016: $601,800
YOY Price Increase: 15.7%
Median Price May 2016: $595,000
YOY Price Increase: 7.8%
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