Market Update for July 30

Anyone following the latest headlines about Toronto’s housing market, has by now heard that Toronto’s housing market is showing signs of cooling. But these types of headlines can leave many buyers confused about what “cooling” really means. Active buyers who are still seeing 8+ offers on the homes they are bidding on are certainly not feeling any ‘cooling’. Buyers considering entering the market are wondering if a cooling market means prices will fall in the near future, like right after they’ve bought.

The months of inventory (MOI) gives us a good measure of how hot the market is at any given point in time – the lower the inventory the hotter the market. An MOI between 4-6 months is generally considered a “balanced market” with anything below 3, it’s a hot seller’s market.

MOI for houses was below 1 month for all five municipalities in March, a sign of an overheating housing market. Inventory levels have increased slightly since then, but still remain in seller’s market territory.

While the GTA’s housing market is still in seller’s market territory, this slight increase in inventory since March has taken some of the heat out of the market. Houses and condos for sale are seeing fewer showings and fewer offers on their offer nights. We are also seeing a decline in the number of homes selling for more than the owner’s asking price in both segments.

This cooling trend we are seeing today is a seasonal trend we typically see as we move into the summer months of July and August. The market usually cools in the summer as many active buyers hit pause on their search to take a summer break. Many of these buyers jump back into their home search in September. What the fall market will look like will largely depend on how many new buyers enter the market and the volume of homes listed for sale.