Imagine you're in a giant supermarket with lots of aisles, where each aisle represents a different neighbourhood, and the products on the shelves are the houses for sale. "Months of inventory" indicates how many months it would take to sell all of the houses (or products) currently on the market (the shelves) at the current rate of sales, without any new houses being added to the market. Generally in Toronto, 4 months of inventory is seen as a Balanced Market and anything above is a Buyer's Market, and anything below is a Seller's Market.
For a first-time home buyer, this information is important because:
- Buyer's vs. Seller's Market: If there's a high number of months of inventory in an area, it indicates more supply than demand, suggesting a buyer's market. This can mean more options, less competition, and potentially better negotiation power on price. Conversely, a low number of months of inventory would indicate a seller's market, where homes may sell faster and at higher prices.
- Pricing: Understanding months of inventory can help you judge if homes are priced correctly. Homes might be priced higher or sell more quickly in markets with less inventory.
- Decision Making: It can influence your urgency. If inventory is low and you find a home you love, it might be wise to act quickly. If inventory is high, you might have more time to shop around.
- Negotiation Leverage: Knowing if it's a buyer's or seller's market can give you leverage in negotiations, either to push for a better price or to make your offer more attractive without necessarily upping the price.
The term "Buyer's Market" has been floating around since 2023 and I want to break it down with our current Months of Inventory (MOI) to see if Toronto really is in a buyer's market. Depending on what you want to buy and where you want to buy, this can really impact your decision. I have listed the current MOI below:
City of Toronto Condos: 3.9 MOI down from 8.2(!) MOI at the start of the year. In January we were heavily in buyer's market territory for Toronto condos, and now listings have levelled out to a balanced market.
If we break the City of Toronto down further into different regions, you'll see how neighbourhoods really play a role in MOI.
Downtown Toronto Condos: 5.8 MOI (Buyer's Market)
East York/Riverdale/Beaches Condos: 2.6 MOI (Seller's Market)
High Park/Parkdale Condos: 2.6 MOI (Seller's Market)
Yorkmills/Rosedale Condos: 4.8 MOI (Balanced/Buyer's Market)
Weston/Yorkdale Condos: 3.3 MOI (Seller's Market)
Willowdale/Bayview Village Condos: 2.7 MOI (Seller's Market)
Etobicoke: 3.5 MOI (Balanced/Seller's Market)
Just in Downtown Toronto alone, there are over 1,908 active condo listings. Once we break it down based on months of inventory, Downtown Toronto is the best neighbourhood for first time condo buyers to consider purchasing in. Higher months of inventory can lead to more options, less competition, and potentially better negotiation power on price.
Remember, months of inventory is just one tool. It should be used alongside other market data such as recent sales trends, average days on market, and local economic indicators to make an informed decision. If you're considering buying in the Toronto real estate market, contact me to discuss your options.
