January's Market Watch for the GTA

As we moved from 2022 into 2023, the Greater Toronto Area (GTA) housing market unfolded as expected. The number of January sales and the overall average selling price were similar to December 2022. On a year-over-year basis, both sales and prices were down markedly, continuing to highlight the impact of higher borrowing costs on affordability over the last year.

There were 3,100 sales reported by TREBB’s MLS System in January 2023. The average selling price for January 2023 was $1,038,668 was slightly lower than the December 2022  and down by 3%.

“Home prices declined over the past year as homebuyers sought to mitigate the impact of substantially higher borrowing costs. While short-term borrowing costs increased again in January, negotiated medium-term mortgage rates, like the five-year fixed rate, have actually started to trend lower compared to the end of last year. The expectation is that this trend will continue, further helping with affordability as we move through 2023,” said TRREB Chief Market Analyst Jason Mercer.

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There were 75,140 sales reported through TRREB’s MLS® System in 2022 down 38.2% compared to the 2021 record of 121,639.

The number of new listings amounted to 152,873 down 8.2% compared to 166,600 new listings in 2021.

The number of homes listed for sale in 2022 was down in comparison to 2021. This helps explain why selling prices have found some support in recent months. Lack of supply has also impacted the rental market. As renting has become more popular in this higher interest rate environment.

The average selling price for 2022 was $1,189,850 up 8.6% compared to $1,095,333 in 2021.

Comparing November 2022 to December 2022, we saw a 48.2% decline in residential transactions and a 21.3% decrease in new listings. The average selling price was $1,051,216.

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Homeownership market activity in November continued to be influenced by the impact of higher borrowing costs on affordability. Sales were down markedly compared to the same period last year, following the trend that unfolded since the commencement of interest rate hikes in the spring. New listings were also down substantially from last year, and at a very low level historically. The fact that the supply of homes for sale has remained low, has supported average selling prices at the $1.08 to $1.09 million mark since August.

House sales were down 49 per cent compared to November 2021, but remaining at a similar level to October especially after considering the recurring seasonal downward trend in the fall. New listings, were down on both a year-over-year basis and month-over-month basis.

The average selling price for all home types combined was down by 7.2 per cent year-over-year. Annual price declines continued to be greater for more expensive market segments, including detached and semi-detached houses.

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Despite the continued housing market transition to a higher borrowing cost environment, the average selling price in the Greater Toronto Area (GTA) found some support near $1.1 million since the late summer. GTA home sales continued to adjust to substantially higher interest rates in October 2022, both on an annual and monthly basis. However, new listings are also down year-over-year and month-over-month.

In October we saw a 49.1% decrease in sales compared to September. New listings were down by 11.6 per cent year-over-year and reached an October level not seen since 2010. The average selling price for all home types combined, at $1,089,428, was down by 5.7 per cent compared to October 2021.

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households,” said TRREB President Kevin Crigger.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,” said TRREB Chief Market Analyst Jason Mercer.

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The Greater Toronto Area (GTA) housing market continued its adjustment to higher borrowing costs in September 2022. Sales for the month reached 5,038, but were down by 44.1 per cent compared to September 2021 and down 10.8% compared to last month. New listings were also down on a year-over-year basis by 16.7 per cent. This was the lowest number of new listings reported for the month of September since 2002.

We also saw a 2.7% drop in average selling prices compared to last month and a 4.3% decrease compared to September of last year. With another interest rate hike approaching it will be interesting to see how the housing market responds in turn.

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There were 5,627 home sales reported through the Toronto Regional Real Estate Board in August 2022 – down by 34.2 per cent compared to August 2021. That said, we see a slight increase compared to July 2022. New listings also declined on a year-over-year basis in August and compared to July 2022. The expectation is that the trend for new listings will continue to follow the trend for sales, as we move through the second half of 2022 and into 2023.

Market conditions remained much more balanced in August 2022 compared to a year earlier, as is consistent with July 2022. Despite buyers continuing to benefit from more choice, every increasing interest rates are causing buyers to remain cautious in the current market conditions. The average selling price was up by 2.1 per cent compared to August 2022. Less expensive home types remained popular, including condo apartments, as more buyers turned to these segments to help mitigate the impact of higher borrowing costs.

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There were 4,912 home sales reported through the Toronto Regional Real Estate Board in July 2022 – down by 47 per cent compared to July 2021. Following the regular seasonal trend, sales were also down compared to June. New listings also declined on a year-over-year basis in July, albeit down by a more moderate four per cent. The expectation is that the trend for new listings will continue to follow the trend for sales, as we move through the second half of 2022 and into 2023.

Market conditions remained much more balanced in July 2022 compared to a year earlier. As buyers continued to benefit from more choice, the annual rate of price growth has moderated. The average selling price was up by 1.2 per cent compared to July 2021 to $1,074,754. This is also down slightly from June 2022. Less expensive home types, including condo apartments, experienced stronger rates of price growth as more buyers turned to these segments to help mitigate the impact of higher borrowing costs.

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Higher borrowing costs continued to impact home sales in June 2022. Sales totalled 6,474 – down by 41 per cent compared to last year’s strong result. The number of transactions was also down compared to May 2022, but this is often the case due to the seasonal nature of the market.

The average selling price, at $1,146,254, remained 5.3 per cent above the June 2021 level, but continued to trend lower on a monthly basis. Annual price growth was driven more so by less expensive market segments, including townhouses and condominium apartments.

While the number of transactions was down year-over-year, the number of new listings was little changed over the same period. This has provided for more balance in the market, resulting in a more moderate annual pace of price growth.

Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein home buyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up. We can expect current market conditions to remain in place during the slower summer months.

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Greater Toronto Area (GTA) housing market conditions continued to evolve in response to higher borrowing costs. Similar to April results, May 2022 sales were down on a monthly and annual basis. Conversely, active listings at the end of May were up on a month-over-month and year-over-year basis. More balanced market conditions have provided buyers with more negotiating power. As a result, while benchmark and average home prices were up substantially compared to last year, selling prices trended lower on a month-over-month basis.

Residential sales were down 38.8 per cent compared to May 2021 and down nine per cent compared to April 2022. The number of new May listings was similar to last year’s level and edged up on a month-over-month basis. With sales down and new listings trend flat to slightly up, the number of active listings was up on a year-over- year basis by 26 per cent.

Market conditions remained tight enough to support an overall average selling price of $1,212,806 for May 2022, representing an annual growth rate of 9.4 per cent.

We are now seeing more balance in the market, providing buyers with more negotiating power, despite interest rates steadily rising.

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The Greater Toronto Area (GTA) housing market continued its adjustment to higher borrowing costs, with the number of transactions down on a monthly and annual basis. As has been the case with previous rate tightening cycles, some home buyers have moved to the sidelines to determine how they will reposition themselves in the marketplace given the higher rate environment and related impact on affordability.

Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation. Negotiated mortgage rates rose sharply over the past four weeks, prompting some buyers to delay their purchase.

The average selling price, at $1,254,436, was up by 15 per cent compared to April 2021, but down compared to the average selling price of $1,300,082 in March 2022. In April we also saw a 41.2% decrease in residential transactions compared to this time last year. Finally, we see a 11.7% decrease in total new listings compared to this time last year.

“Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year. However, in line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month. It is anticipated that there will be enough competition between buyers to support continued price growth relative to 2021, but the annual pace of growth will moderate in the coming months,” said TRREB Chief Market Analyst Jason Mercer.

There was a 30 per cent decline in sales compared to the record result in March 2021. While sales were down year-over-year for all major market segments, condominium apartment transactions dipped by a much lesser annual rate.

New listings were also down on a year-over-year basis, but by a much lesser annual rate than sales. This suggests that while market conditions remained very tight, home buyers did not experience the same level of competition from other buyers compared to a year earlier.

The average selling price was up by 18.5 per cent year-over-year. In March we saw a shift in favour of condominium apartments which generally sell for a lower average price compared to other home types.

Competition between home buyers in the GTA remains very strong in most neighbourhoods and market segments. However, we did experience more balance in the first quarter of 2022 compared to last year. If this trend continues, it is possible that the pace of price growth could moderate as we move through the year, according to TRREB Chief Market Analyst Jason Mercer.

February home sales were down compared to the all-time record in 2021. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market.

That being said, demand for ownership housing remains strong throughout the GTA, and while we are marginally off the record pace seen last year, any buyer looking in this market is not likely to feel it with competition remaining the norm.

Inventory remains exceptionally low so it will take some time for the pace of price growth to slow. We can expect a more moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold temporarily as they resituate themselves in the market.

This is a great time for sellers to take advantage of when the demand is so high. And if you are looking to buy… now is the time to purchase before prices continue to rise to unprecedented numbers.