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Have you been wondering whether our real estate market is on the cusp of a crash? Do today’s media reports have you confused about the current state of our marketplace? With our recent changes to Canadian mortgages set forth by the government this past summer, the outlook for borrowers has changed significantly with the cost of homeownership being much higher for buyers. These changes took place after the Canadian Finance Ministry reviewed high prices and the high debt-to-income ratio of citizens.
Some Areas Experiencing Decline in Home Prices
One of the recent trends of declining sales as we approach the winter season has raised question as to whether the housing industry is set to suffer a major crash with decreasing home values. This may be true in some areas such as in the Durham Region however it does not apply in the Greater Toronto Area. The main concern has been one of slightly declining sales prices that dipped an average of about $3,000 from the month of August to September this year in the Durham Region.
Months of Inventory (MOI) Redirecting Market to Stable Level
Considering the basic principle of supply and demand, keep in mind that the greater the number of properties the less likelihood for higher prices. Similarly, fewer homes on the market will generate increased buyer interest. The way we measure this phenomenon in the real estate industry is to use a measurement of Months of Inventory (MOI). Calculated using the number of active listings divided by the sales, anything under 3 months of inventory indicates a sellers’ market while anything within 3-6 months of inventory is a balanced market. An inventory level of 6 months or more is considered a buyers’ market since buyers have control in that scenario.
The chart below shows the trends we have been experiencing with four consecutive months in the middle of the year when the MOI was less than 2 months – resulting in artificially inflated prices coming from heightened interest and multiple offers. Looking at the MOI for the Durham Region in September 2012 as compared to the same time the previous year, the number has come down slightly from 2.63 to 2.57 months. However considering the transition from July through September, we are heading toward a stable market with MOI numbers hovering at 3-4 months.
For further information and detailed statistics as published by the Toronto Real Estate Board, click here to access the GTA Realtors Release report.
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As they say, real estate is local so to get an accurate picture of your own neighborhood I invite you to contact me today for more information as it relates to your marketplace. I can be reached at 905.428.8100 or via email at shawn@shawnlepp.com and look forward to hearing from you today!
Have you been wondering whether our real estate market is on the cusp of a crash? Do today’s media reports have you confused about the current state of our marketplace? With our recent changes to Canadian mortgages set forth by the government this past summer, the outlook for borrowers has changed significantly with the cost of homeownership being much higher for buyers. These changes took place after the Canadian Finance Ministry reviewed high prices and the high debt-to-income ratio of citizens.
Some Areas Experiencing Decline in Home Prices
One of the recent trends of declining sales as we approach the winter season has raised question as to whether the housing industry is set to suffer a major crash with decreasing home values. This may be true in some areas such as in the Durham Region however it does not apply in the Greater Toronto Area. The main concern has been one of slightly declining sales prices that dipped an average of about $3,000 from the month of August to September this year in the Durham Region.
Months of Inventory (MOI) Redirecting Market to Stable Level
Considering the basic principle of supply and demand, keep in mind that the greater the number of properties the less likelihood for higher prices. Similarly, fewer homes on the market will generate increased buyer interest. The way we measure this phenomenon in the real estate industry is to use a measurement of Months of Inventory (MOI). Calculated using the number of active listings divided by the sales, anything under 3 months of inventory indicates a sellers’ market while anything within 3-6 months of inventory is a balanced market. An inventory level of 6 months or more is considered a buyers’ market since buyers have control in that scenario.
The chart below shows the trends we have been experiencing with four consecutive months in the middle of the year when the MOI was less than 2 months – resulting in artificially inflated prices coming from heightened interest and multiple offers. Looking at the MOI for the Durham Region in September 2012 as compared to the same time the previous year, the number has come down slightly from 2.63 to 2.57 months. However considering the transition from July through September, we are heading toward a stable market with MOI numbers hovering at 3-4 months.
For further information and detailed statistics as published by the Toronto Real Estate Board, click here to access the GTA Realtors Release report.
~
As they say, real estate is local so to get an accurate picture of your own neighborhood I invite you to contact me today for more information as it relates to your marketplace. I can be reached at 905.428.8100 or via email at shawn@shawnlepp.com and look forward to hearing from you today!
