Home Prices Surge...But No One is Buying - Sept GTA Housing Update

From the ground floor, real estate is slow right now. Buyer sentiment is low and sellers simply refuse to sell for lower prices leading to large gaps and deals not coming together. September numbers came in a shock to many as prices increased in the month of September (+$37K, 3.4%).

My hypothesis is that 1) part of this is seasonality as you typically see better inventory in the fall vs. the summer and as a result prices are higher because the product is better and 2) partially due to sales mix as detached homes made up a larger portion of the total in Sept vs. Aug.

Digging deeper into key metrics, you can see that the market is anything from 'hot'. Active inventory moved up sharply as new listings spiked while sales remained flat. To put this in perspective, sales were 40% LOWER than the 10 year average (Sept) and New Listings were 24% HIGHER. Absorption (sales to new listings) came in at 28.6% which is a figure we haven't seen since 2009 (for any month) and would mean that we are sharply in a 'buyer's market'.

Months of inventory also jumped to 4.1 which is a far cry from the 1 - 2 months we have been used to since the pandemic. So while prices in September increased, the metrics paint a completely different story. We are firmly in a buyer's market and if new listings continue to come on while sales remain slow, it will only be a matter of time where the sellers that need to sell, will have to take lower prices.