Many of our readers have been a bit concerned about the rise in inventory (homes available for sale) in Toronto’s real estate market. The principal question on most people’s minds is; with supply on the rise and demand on the decline, is Toronto’s real estate market on shaky ground?
A couple of weeks ago I wrote a post that cautioned readers against comparing current inventory levels to the levels we saw in 2007. Inventory levels in 2007 were significantly lower than levels we’ve seen in recent years making it a bad year to use as a benchmark. (See Toronto's Real Estate Market - Are Things as Bad as They Seem?)
Total inventory alone is an important measure, but if we are to gain any insight into the overall health of our market we need to consider the total inventory (or supply) in the market relative to the existing demand for houses. Is demand keeping up with the changes in supply? Does the demand still outweigh the supply in the market? At what point is demand and supply balanced?
