Condo sales bounced 41% year-over-year in October, a steep increase following an unusually weak October 2018. When we adjust for these big fluctuations we can see that sales this month were slightly above the ten year average, suggesting a healthy condo market.
Prices are still recording declines on a year-over-year basis with the MLS benchmark price of a condo recording a 5.8% decline and the average price per square foot falling 4.3% from last year. However, in recent months there have been signs of stabilization.
The main reason condo price declines are easing is a decline in inventory. Inventory growth was trending higher for the past year but has since reversed in recent months due to rising sales and a decline in new listings as sellers hold off from listing their units. As of the end of October there was just 3.4 months of inventory for sale. It is close to impossible to see a sustained decline in prices when inventory is in this range. It needs to grow above 5 or more to see downwards pressure on prices.
Despite the decline in inventory we still believe months of inventory should turn higher in the year ahead given there is a record number of new condo units under construction, and we expect completions to begin ramping up next year.
In summary we find the condo market is in good shape. Entry level condos are once again fetching multiple offers but as soon as prices start to creep up we are seeing some softness. Overall, inventory remains low, and this is keeping prices relatively flat for now. We suspect inventory could actually fall further in the winter months before eventually turning higher once again in the New Year.