This morning, TRREB released the sales data for April. The line item that really stands out to me is the new listings. At 11,364, we’re seeing close to 40% fewer listings come to market than we did a year ago. For historical context, this is 30% below the 10-year average. 

With lending rates now at 4.79 to 4.89 percent, we’re starting to see what we predicted would happen…buyers have been coming off the sidelines. Since January 25, when we had a quarter point rate increase followed by two announcements with a zero increase, many have now realized, given the lower prices, that it’s a good time to get into the market. But because of a “group-think” mentality, buyers started coming in together and driving the demand up.

The problem is that we’re not getting the supply. So, what happens when you’ve got high demand and low supply? The prices go up. Right now, we still have sellers waiting to list because their house was $1.3M last year, it’s $1.1M this year, and they’re reluctant to part with that perceived loss of value. But suddenly, we’ve got this high demand…if that drives the prices up high enough, then the sellers will decide to participate. 

Hopefully, that will help fill the demand and create more of a natural market. The problem, of course, is that we’re going to see prices getting driven up. People talk to me all the time, saying, “wow, the market’s fantastic, I see prices are going up.” In my mind, other than the incentive for the sellers to list their homes, I’m not particularly excited about increased prices in Toronto. We don’t need increased prices, we need transactions. That’s how I measure market success. Without the housing inventory, we can’t realize that goal.

My expectation moving forward is that we’re going to have a late spring market. New listings should be getting a little closer to the 10-year average as we enter the summer months.  Experience shows how quickly the market can change over short periods of time. The demand is in place to have a robust spring market…we just don’t have the supply to support it. As prices increase, expect more sellers to get engaged in the real estate market. 

As always, I would encourage anyone reading this to reach out to me at 416.723.2383, or to contact a member of the Harvey Kalles sales team. We will be happy to provide clarity around what’s happening within the current real estate environment. We have been in business since 1957, and bring a wealth of experience to fluctuating markets.