2020's Going To Be A Sellers Market
It’s pretty easy to see that real estate market conditions in Canada have been largely described as a growing supply and demand gap. While other factors such as foreign investment have contributed to this scenario, the bottom line is that there are still far too few homes available to address the current and ever increasing levels of demand, particularly in the greater Toronto area real estate market.
Although some new initiatives initially helped to somewhat "chill" the real estate market, along with the implementation of the federal mortgage stress test, these measures ended up only leading to many sellers removing their listings, leading to a 33% drop in new listings following these program launches.
Overall real estate sales levels and home prices have rebounded steadily over the past year, however the same can’t be said for the level of new listings. Real estate as a whole in the GTA can be considered a sellers’ market going forward. Sales-to-new-listings ratios hover in the 68% range, and new supply continues to shrink year over year. Total months of inventory – the time it takes to completely sell off all available homes for sale – currently sits at 5 months, its lowest level since 2007.
More recent reports out of the Toronto real estate market show that lack of supply is a far more pressing issue than most tend to believe. The end-of-year numbers from the Toronto Real Estate Board reveal the sales-to-new-listings ratios for the region were over 80%, indicating just under 20% of all new listings brought to market were sold in the month prior. This analysts is raising concerns that should this overall trend persist or even get worse, it could again create the type of unsustainable price growth that was seen in 2016, which was what prompted new regulatory change in the first place.
The other issues to support a sellers market in real estate in the GTA are the persistently strong population growth in the GTA, now also coupled with declining mortgage rates and the new changes to the mortgage stress test rules, all which point to the scale being even further tipped towards the sellers side of the market.