Ontario Real Estate Glossary
Definitions for common real estate terms used in Ontario market reports
Months of Inventory (MOI)
The number of months it would take to sell all current active listings at the current sales rate. Under 4 months typically indicates a seller's market. Over 6 months indicates a buyer's market. Between 4 and 6 months is considered balanced.
Days on Market (DOM)
The number of days a property is listed on the MLS before it sells. Lower DOM indicates higher demand and a faster market. DOM under 20 is considered a hot market in Ontario.
Sale-to-List Price Ratio (SP/LP)
The ratio of the final sale price to the original list price, expressed as a percentage. Over 100% means homes are selling above asking price on average. Under 100% means homes are selling below asking.
Home Price Index (HPI)
CREA's composite benchmark price index that tracks price changes over time for a typical home. Unlike average or median prices, HPI adjusts for changes in the mix of properties sold, providing a more accurate measure of price trends.
Absorption Rate
The rate at which available homes are sold in a given time period, expressed as a percentage. A high absorption rate indicates strong demand. Calculated as the number of homes sold divided by the number of available homes.
Median Price
The middle value when all sale prices in a market are arranged from lowest to highest. Less affected by extremely high or low sales than the average price, making it a more reliable indicator of typical market value.
Average Price
The arithmetic mean of all sale prices in a market. Can be significantly influenced by a small number of very high-priced or very low-priced sales (outliers).
Benchmark Price
CREA's MLS HPI benchmark price represents the price of a typical home in an area. It accounts for differences in property characteristics (size, age, location) and provides a more apples-to-apples comparison than average or median prices.
Active Listings
Properties currently listed for sale on the MLS. A higher number of active listings gives buyers more choices and potentially more negotiating power.
Conditional Sale
A sale where the buyer's offer has been accepted but is subject to certain conditions (such as financing approval, home inspection, or sale of the buyer's existing home). The property remains conditionally sold until all conditions are met or waived.
Firm Sale
A sale where all conditions have been met or waived. The transaction is binding on both parties and the property is considered sold, pending closing.
List Price
The price at which a property is listed for sale on the MLS. In competitive markets, properties may sell significantly above list price. In slower markets, properties often sell below list price.
MLS (Multiple Listing Service)
A database system used by real estate boards to share information about properties listed for sale. In Ontario, the primary MLS systems are operated by ITSO (Information Technology Systems Ontario) and TRREB (Toronto Regional Real Estate Board).
CREA
The Canadian Real Estate Association. The national organization representing over 160,000 REALTORS across Canada. CREA administers the MLS system and publishes the Home Price Index.
RECO
The Real Estate Council of Ontario. The regulatory body that administers the Trust in Real Estate Services Act (TRESA) and oversees the conduct of real estate professionals in Ontario.
TRESA
The Trust in Real Estate Services Act. Ontario's legislation governing the conduct of real estate professionals, replacing the former Real Estate and Business Brokers Act (REBBA) in 2023.
Price Reduction
When a seller lowers the list price of their property while it is still on the market. A high percentage of price reductions in a market may indicate overpricing or weakening demand.
New Listing
A property that has just been listed for sale on the MLS. The number of new listings entering the market is a key supply indicator.
Sold Above Asking
When a property sells for more than its list price. Common in competitive seller's markets, particularly in the Greater Toronto Area. Often associated with multiple-offer situations.
Sold Below Asking
When a property sells for less than its list price. More common in buyer's markets or for properties that have been on the market for an extended period.
Sales-to-New-Listings Ratio (SNLR)
The number of sales divided by the number of new listings in a period, expressed as a percentage. SNLR above 60% generally indicates a seller's market. Below 40% indicates a buyer's market.
Land Transfer Tax (LTT)
A tax levied by the Province of Ontario on the purchase of real estate. Calculated as a percentage of the purchase price using a tiered rate structure. Toronto also levies a municipal land transfer tax.
Comparable Sales (Comps)
Recently sold properties that are similar to a subject property in terms of size, condition, location, and features. Used by appraisers and real estate professionals to estimate market value through a Comparative Market Analysis (CMA).
CMA (Comparative Market Analysis)
An estimate of a property's value based on recently sold comparable properties in the area. Prepared by real estate professionals. Not the same as a formal appraisal by a licensed appraiser.