Toronto’s housing market experienced a notable shift as a surprise rate hike by the Bank of Canada in June 2023 had a direct impact on home prices. The Greater Toronto Area (GTA) witnessed its first monthly decline in prices since January 2023. However, despite this pullback, the market still saw an annual increase in prices, marking a positive trend for the region’s real estate sector.
Impact of Higher Mortgage Rates (Paragraph 2): The rise in mortgage rates and increased borrowing costs contributed to a slowdown in demand within the GTA housing market. In June 2023, there were 7,481 home sales, reflecting a 17% decrease compared to the previous month. However, when compared to the same period last year, home sales still exhibited a significant 15% year-over-year increase. This upswing in sales signifies a positive change after several months of fluctuating market conditions.
Despite the decline in sales, the market faced limited housing supply. In June 2023, only 15,865 new listings were made, representing a 3% decrease compared to the previous year. This decrease in new listings, combined with the year-over-year increase in sales, suggests that competition among buyers will likely intensify. Consequently, this could exert upward pressure on Toronto home prices.
The slump in sales contributed to a decrease in Toronto’s sales-to-new-listings ratio (SNLR), which dropped to 47% from 59% in the previous month. An SNLR above 60% indicates a seller’s market, where buyers compete for limited inventory, while a ratio below 40% signifies a buyer’s market. The GTA’s SNLR has been fluctuating between these two levels, with the 12-month SNLR trend settling at 52.5%.
The GTA’s benchmark home price for June 2023 was $1,171,300, reflecting a 2% year-over-year decrease. However, this decline represents an improvement compared to the 7% year-over-year decrease observed in May 2023.
City of Toronto home prices displayed significant growth, rising by 24% compared to the previous year, reaching an average price of $1,152,424 in June 2023. This increase outperformed other areas within the GTA. Despite the substantial annual price gain, the City of Toronto witnessed a 3% decline in prices on a monthly basis. Most markets across the GTA experienced a negative monthly change in average home prices, despite positive annual price increases.
Analyzing property types in the Greater Toronto Area, most categories demonstrated year-over-year increases in average prices, despite a temporary dip in prices during the current month.
Detached homes recorded an average price of $1,530,997 in June 2023, representing a 5% year-over-year increase but a 2% decrease from the previous month. Semi-detached homes experienced the largest monthly and annual price increase among all property types, with an average price of $1,214,872, up 8% year-over-year and 1% month-over-month.
Freehold townhouses registered an average price of $1,087,967, showcasing a 6% year-over-year increase but a 3% decline from the previous month. Condos, on the other hand, displayed a more stable pricing trend, with an average price of $739,395, down 1% both annually and monthly.
The recent rate hike by the Bank of Canada caused a slight pullback in Toronto’s housing market, leading to a monthly decline in home prices within the GTA. However, despite this setback, the market still exhibited positive annual growth, indicating resilience and stability. The interplay between supply constraints and increased competition may continue to impact prices, making the market dynamic for both buyers and sellers in the coming months.
Since before the Budget Day on April 16, Prime Minister Justin Trudeau has been making announcements addressing the housing crisis facing the North American nation. From incentivizing the construction of affordable housing to reconstruction, these plans promise to improve the housing infrastructure of Canada.
The real estate sector’s most influential leaders and innovators will be gathering in Calgary for a conference that, in all probability, is going to be the biggest real estate event in Alberta. Titled, ‘Rock’N REAL ESTATE 2024’, the BUZZ conference will be taking place in Carriage House Hotel & Conference Centre on Thursday, May 2. The meeting will open at 7:30 am with a light continental breakfast. The discussion will go from 8 am to 5 pm followed by an hour of networking session at the end of the event. Cocktails on the house!
Canadian housing activity was largely stable in March, but a key spring selling season lies ahead. Existing homesales edged up 0.5% in March (seasonally adjusted) and were up a modest 1.7% from sluggish year-ago levels (although an early Easter long weekend likely reduced volumes somewhat). While current activity might seem quiet compared to the exuberance in 2021 and early 2022, sales volumes are trending about in line with pre-COVID norms, albeit at the low end of that range.
“We are changing the way we build homes in Canada. In our housing plan and Budget 2024, we are delivering ambitious action and investments to build more homes, make it easier to rent or own, and help the most vulnerable with stable housing. This is about restoring fairness for every generation, and housing is at the heart of that”, said Canadian Prime Minister, Justin Trudeau about the country’s new housing plan.
7481 Woodbine Ave #203, Markham, ON L3R 2W1 (647) 806-8188