High Demand, Low Inventory: What Months of Inventory Said About Toronto in January 2024

As of February 2024, Toronto's problem was inventory, not demand. January 2024 data put months of inventory at four months for all property types, 3.25 for freehold and more than four and a half for condos. Demand was high, the number of homes actually selling was small, but the figures were not worse than a year earlier.

I am Moe Asgarian, a Broker in Toronto, and this is the January 2024 board data as I was reading it with clients in February 2024. The worry people had was fair. The feeling that things were getting much worse was not, and the reason is the numbers.

Months of inventory is the number I check every month

If you want to follow this market properly, check months of inventory every month. It answers one question: if not a single new home came to market from this moment, how many months of supply would we have to meet demand? It is also easy to work out. At the end of each month you take the month's listing count and divide it by total sales.

The bands matter more than the raw figure, because they tell you what type of market you are in. In a city like Toronto, months of inventory at one month or under means a very hot market that belongs to sellers. At six or seven months you have a market that works well for buyers. Around three months is the balance point, where things look normal and the chance of a shock is low. Those are the bands I applied to the January 2024 figures below.

January 2024: four months of inventory across all property types

Based on the figures the Toronto Regional Real Estate Board published for January 2024, months of inventory for all property types was four months. The arithmetic behind that was about 5,300 active listings in the month against 1,300 transactions completed by the end of it. That is a healthy and safe market. On prices, January 2024 showed only a very small increase overall, though in some parts of the market, which I come to below, stranger things were going on.

The figure differs by property type, which is why I never stop at the all-types number. It is also worth saying plainly what the January 2024 problem was. It was inventory. Demand was high. The number of homes that finally sold was small.

Freehold in January 2024: 3.25 months and a slight tilt to sellers

Narrow it to freehold property in the Toronto market and January 2024 showed about 1,400 listings with 450 of them sold, which that month's read put at 3.25 months of inventory. That is a balanced market with a bit of a lean toward sellers. So even in the freehold segment, where the transaction counts are larger, months of inventory sat around three. One thing to hold alongside it: if you look at the condo market in one particular pocket, you can still see months of inventory down near one month. Both facts are true at once, and each deserves attention.

Condos in January 2024: more than four and a half months

Condos were the softer half. In January 2024 there were roughly 4,000 active condo listings and buyers were found for about 900 of them, which came out at more than four and a half months of inventory. Some of that supply had already walked away: in December 2023 more than 30% of the active condo inventory came off the market and had not come back, which is sellers deciding, for now, that they no longer want to sell.

Step back a little and the pattern is clear. The condo market was slow through the second half of 2023, and we closed that year with a condo market that belonged to buyers, with prices down for a sixth month in a row. By January 2024 that slide had stopped. If sales kept running at the January 2024 pace, my expectation was a very small price increase in February and March 2024. But my view at the time was that with inventory where it was, condo prices were not going to climb strangely higher through 2024. Moderate, with a lean toward buyers, is how I would describe it on the inventory math alone.

About those 85-offer headlines, and the January effect

News was going around in early 2024 of 85 offers landing on a single home. A headline like that is not a good sign for a market. It is a sign of how little is for sale. It is also not the whole truth about the market, which is why I keep going back to the inventory figures instead of the anecdotes.

One more thing to keep in mind about any January reading. The turn of the year is a real psychological event for the people who make up this market, in a way that moving from June into July is not. The last day of December and the first day of January genuinely feel different, and the market is always livelier in January than in the closing months of the year. These January 2024 figures are not strange in that light. More months were coming, and with rate changes ahead the market would meet new conditions. None of that is a reason to stop studying it. In the end, the person whose chances in this market improve in any meaningful way is the one who knows the numbers and the indicators well enough to read it.

Analysing the market and going through the official Toronto housing data is work our team has done for years, broken out by property type and by area of the city, because the all-types number hides most of what matters. If you want that done for your own property type and your own neighbourhood, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.