Andy7 asks, “If there is consistently about 20% of inventory left over each month or an extra 1,097 homes over a year, why are we having such an inventory crisis? Shouldn’t inventory consistently grow if it’s not being used up each month? Where is all that unsold inventory going?”
The answer is that listings for unsold inventory either expire (a typical listing contract is for 90 days) or they are cancelled by the seller. These properties are typically the dregs and are overpriced for the market. Either they continually relist (some properties are for sale for years) hoping for some schmuck buyer to come along that wants to pay more than market value, or they wait until the market catches up to their price.
At first glance if we look at the number of off market/cancelled listings in the last few years, it seems to make sense that they have been decreasing lately as the market appreciated and fewer properties linger unsold.
However if we look at the percentage of listings that tend to drop off the market, it has been remarkably consistent through some wildly different market conditions.
About 15% of properties listed end up not selling every month, with a pretty clear seasonality. Few expired listings at the start of the year with everyone waiting for the spring market, then an increasing number later in the year peaking from December to January.
Also weekly numbers courtesy of the VREB.
|Wk 1||Wk 2||Wk 3||Wk 4|
|Sales to New Listings||51%||61%||
|Months of Inventory||
2000 listings even! Still some 15% fewer properties on the market compared to this time last year, but sales rate is down 22% so the gap is closing.
It seems there is a bit of a panic in Toronto amongst the mortgage brokers as credit dries up. Banks hobbled by CMHC, B lenders hit by Home Capital’s exit, and private lenders tapped out. This is going to be interesting…