Toronto’s housing market showed clear indications of cooling in April, putting off some would-be purchasers. Compared to last year, the region’s real estate board saw a 41% decrease in sales year over year and a 27% decrease in sales month over month. According to the Toronto Regional Real Estate Board, there were 8,008 total sales in the Toronto area in April, down from 13,613 in 2013 and 10,939 in March.
The board says that homeowners are getting out of the market to rethink their plans because interest rates are increasing, but their buying power is decreasing. It is the worst economic crisis in the 905 regions surrounding Toronto, including cities like Mississauga, Brampton, and Markham. The statistics from TRREB show that the percentage of sales this month that were lower than the same month last year was highest for detached properties in the 905.
According to the MLS, the sales of detached houses in the 905 area fell by more than 47%. Also, the sales of townhouses fell by 44%. Sales of semi-detached houses in the 905 regions decreased by 40% year over year to 491 last month. The number of condominiums sold fell by roughly 32%, to 685.
Compared to the same month a year earlier, detached home sales in Toronto’s 416 area code fell 34% to 868, while sales of semi-detached homes fell by 26% to 311, and townhouse sales fell 42% to 335%. But, in April, 1,488 condos were sold, a 35% decline from the same month in 2021’s figures. After the COVID-19 pandemic peak in sales, property values began to decline. It is spurred by bidding wars and tight competition. But, because of their weight, these variables had a detrimental effect on sales. Compared to March, the average price of a home in Greater Toronto in April was somewhat lower. The average price in April of this year was 15% more than in April of last year when it topped $1,000,000 per month.
The Canadian housing market is now suffering from an increasing headwind. Since 2020, mortgage rates have increased, and more increases are anticipated this year. In October 2018, the Bank of Canada hiked interest rates for the first time on March 2, April 13, and June 1, 2022. The Bank of Canada will anticipate raising interest rates once more in 2019. So, mortgage rates in Toronto will increase, making housing in the city even less affordable. Since February 2022, when it reached an all-time high, the average property price in the Greater Toronto Area has been falling. This increasing headwind has emerged.
The sellers have increased the price, but many of these properties have been on the market for around 20 days. Previous TRREB estimates said that by the end of 2022, the average price of all types of property could be more than $1.2 million. Consider the tailwinds that are propelling the Toronto real estate market. There is a constant stream of immigrants entering Canada, and many of them opt to live in Toronto to be near individuals from their native country. As a consequence, a large number of individuals prefer to immigrate to Toronto. The real estate market in Toronto is rising by the fact that new people are moving here all the time. A further advantage of living in a city in Canada is the plethora of municipal rules. As a result, the restrictions have caused a reduction in the available housing stock, which has offered a further boost to the Greater Toronto Area housing market (GTA).
Recent disturbances in the house-building industry’s supply chain, which have delayed the completion of construction projects, represent the last fundamental tailwind. Because people are building homes less quickly, there are fewer of them on the market. It has helped the Toronto real estate market even more. In recent years, the most potential tailwind for the Toronto housing market has been the yearly house price rise that has exceeded the rate of inflation. Many individuals were motivated to speculate on the home market as a result of their prior success in growing financial marketplaces. Price rises boost speculators’ expectations of profits. It also motivates them to increase leverage in a market that permits leverage. It provides speculative demand in such a market with a negative elasticity. As a direct result, the majority of first-time homebuyers in the southern part of Ontario are priced out of the property market.