September 2024: Market Update

On October 4, the Toronto and Region Real Estate Board (TRREB) released its highly anticipated September sales report, shedding light on the current state of the real estate market. With the ongoing adjustments following high interest rate increases aimed at combating post-COVID inflation, this period is crucial for both buyers and sellers.

September 2024 vs. September 2023

The latest report reveals a generally stable market. Here are the key highlights:

• Sales Volume: There was an impressive 8.5% increase in sales compared to September 2023, marking the largest uptick in a long time.

• Home Prices: Prices have remained largely flat, with a slight decline of 1% year-over-year.

• Days on Market: Homes are taking longer to sell, with an increase of 43.3% in the average days on the market. This trend is largely driven by condos, which are showing more prolonged sales periods compared to freehold homes.

What Does This Mean for the Market?

Looking ahead, expectations are building for a potential decrease in the prime lending rate from the Bank of Canada on October 23. If this occurs, it could bring mortgage rates down to the 4.5-4.7% range. Furthermore, if inflation remains stable, another rate cut could be possible in December. These changes could lead to a more dynamic Spring Market, providing a promising outlook for sellers.

Opportunities for Buyers

For potential buyers, now may be the ideal time to enter the market. Here’s why:

• Short-term Mortgage Advantage: Buyers can secure a short-term mortgage now and renegotiate later if rates decrease further.

• Cost Savings: Even if interest rates go down, but you purchase a home at today’s rates, can save buyers significant amounts compared to waiting for prices to rise as market activity increases.

• Increased Inventory: With more properties available, buyers have greater choices, making it a strategic moment to find the right home.

Conclusion

As the market adjusts to changing economic conditions, both buyers and sellers have opportunities to navigate this evolving landscape effectively. The combination of potential rate cuts and increased inventory suggests that September 2024 could serve as a pivotal moment for those looking to engage in the Toronto real estate market.

April 2024: Market Update

In this issue:

• April 2024 Market Update & Market Stats

• Rental Market Update 2024 | Q1

• 8 New Housing Policies Announced in the 2024 Federal Budget

Toronto Real Estate Market Update

The April 2024 Toronto market stats came out last week and it’s very interesting to see how the housing market was faring this Spring as anecdotally there was chatter of higher interest rates and late-winter weather potentially keeping buyers on the sidelines when the month started. Now that we’re into May, upon review overall sales in the GTA were down -5.0% compared to April 2023 with overall prices remaining steady at 0.3%.

These results seem to suggest the Toronto housing market was quite tepid last month, however with some context, we know that there was a temporary post-pandemic market resurgence last April 2023 that is making this year’s results look lacklustre by comparison. 

In reality the real estate market in Toronto is performing pretty well this year with prices appreciating and sales improving on a monthly basis. If you look at the expanded ‘Toronto Real Estate Stats’ table below you will see that almost all areas of the city and most home types appreciated in April with detached homes in Central Toronto outperforming.

Despite a robust Spring market so far, there were also many homeowners who waited out the winter and were eager to list come March/April, so we saw an increase of 74.4% in active listings compared to last year. The gluttony of supply is offering buyers more choice, which in turn is helping to keep prices down as supply outweighs current demand. This paired with the wait for interest rate cuts from the Bank of Canada is leaving buyers without the same sense of urgency we typically see in Toronto. The result is that despite healthy market interest many properties are remaining on the market longer than expected and we may see the ‘spring’ market continue well into the summer.

Click here to read TRREB’s MarketWatch Report

Luxury Market Report: 2024 | Q1

There has not been a lot to report on in the Toronto luxury market with sales pretty much flat and no significant activity to make note of. There have been a number of listings and high-end buyers aren’t necessarily waiting for interest rates to come down like the rest of the market, but they also don’t typically feel the pressure to make a move unless the right property comes out.

Rosedale did perform well lately because of a large $15M sale (on a $11.5M ask) with multiple bidders having only been on the market 5 days, which shows high-end buyers are willing to pay for the right property these days. But there have only been 3 high-end sales this year, down from 5 last year, with a great deal of inventory gaining days on market. 

Lawrence Park continues to be lagging behind 2023 with properties going for less and overall dollar volume transacted being down too. There seems to be very little urgency in the area right now, perhaps giving buyers a slight edge as the summer draws closer.

Forest Hill has fewer trades so one sale can drastically skew the monthly sales figures (the same can be said for all of these neighbourhoods really) but the area saw sales prices appreciate in general by 17.8% with the same number of sales when compared with January-April 2024 vs. 2023.

The Bridle Path has been slow all year with no sales to note and no significant updates to report. Unless of course you’re Drake whose property had some unsolicited showings last week.

Condo Market Report: 2024 | Q1

Each quarter the Toronto real estate board (TRREB) releases its report on the GTA condominium apartment market. In the first quarter of 2024 condo sales increased by 5.3% compared to Q1-2023 but so too did the number of new listings by 23.3%. This resulted in the average condo price in the GTA declining by -1.0% to $693,754 year-over-year as buyers benefitted from more choice. In the City of Toronto, which accounts for most condo sales, the average selling price was down -0.5% for an average of $723,186.

In the ‘new condominium market’ (often referred to as pre-sale condos) the Greater Toronto Hamilton Area (GTHA) reported 1,461 sales in Q1-2024, the lowest quarterly total since the Global Financial Crisis in Q1-2009 (884 sales). Outside of that brief period in early 2009, new condominium sales haven’t been this low since the late-1990s.

Developers dramatically pulled back on new launches in early 2024, with only four projects totaling 958 units brought to market in the first quarter. Three out of the four projects launched in the GTHA during Q1 were in the 905 Region, resulting in an average opening price for new condos of $1,168 psf — down 12% from Q4-2023 ($1,333 psf) and a 17% drop from the record high in Q1-2023 ($1,407). 

“The market for new condominiums started 2024 where it ended off in 2023, very slow. After two years of preconstruction sales trending down sharply, construction activity is being hit hard. While anticipated reductions in interest rates in the second half of the year should lead to some improvement in market conditions for new condominiums, activity will likely remain subdued as the industry works it way through current inventory and digests the numerous government policies on housing recently released,” — President of real estate insights provider Urbanation, Shaun Hildebrand

Click here to read TRREB’s Q1-2024 Condo Market Report

Click here to read ‘GTHA New Condo Sales Fall 71% Below 10-Year Average' by Urbanation

Market Stats: April 2024

Average Monthly Prices

Toronto Real Estate Stats

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Rental Market Update: 2024 | Q1

Looking at the rental market in the GTA last quarter (January-March 2024) apartment prices were down -2.9% compared to the same time last year, and rent prices on the whole have actually been on the decline lately, down a total of -11.8% since Q3-2023 — the largest six-month decrease recorded during the past 15 years of data tracking outside of the pandemic period in late 2020/early 2021. It’s hard to celebrate too much considering the average monthly rent for 1, 2 and 3-bedrooms apartments was still $2,441, $3,139, $3,929 respectively last quarter, but it’s nice to see a momentary pause in rent inflation for the time being.

The reason prices have come down and are holding steady for the most part is because of the sheer number of rental listings that have come to market recently greatly outweighing demand from prospective tenants. From January to March 2024 (Q1-2024) there was a total of 29,075 rental listings and of those only 13,390 were leased, a lease rate of about 46%. 

Supply from newly completed condos made a significant impact on the rental market. Over the past four quarters, a total of 23,095 new condos were registered, a 21% increase over the same period ending Q1-2023 (19,028) and the third highest four-quarter total ever recorded. At the same time, demand for rentals has been weaker because higher rents are putting pressure on tenants to seek more affordable living arrangements, or to consider buying instead if they can afford.

For now we expect rent prices to remain stable in the near term and don’t foresee prices to continue to fall much, if at all. President of Urbanation states, “While the market remains expensive with rents 15% higher than two years ago, renters waiting for some reprieve in the market have found it thanks to a temporary supply infusion from condo investors. This isn’t expected to last long, and rents should continue rising as construction falls short of demand.”

Supply will continue to be the biggest determining factor in where rent prices go next but it’s tough say how the upcoming market may be impacted. Our outlook is that if interest rates cuts are announced by the Bank of Canada, soon buyers and investors will be much more interested to act quickly and we may see some of the supply dry up. Until then renters have ample time to look around and there is plenty of choice out there to find the right place, for the right place, in a great location. Just don’t expect to get any steals if you’re in the market, this is still Toronto after all.

Click here to read TRREB’s 2024 Q1 Rental Market Report

Click here to read ‘GTHA Condo Rents Down 7% in Past 6 Months’ by Urbanation

Rental Market Summary

Average Rental Prices (Q1 2019 - Q1 2024)

Rental Stats (Q1 2023/2024)

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8 New Housing Policies Announced in the 2024 Federal Budget

On Tuesday, April 16th, the Canadian federal government unveiled the 2024 budget. The annual fiscal announcement detailed dozens of new and ongoing initiatives aimed at creating new housing, along with policies targeted at making renting and home ownership more affordable for Canadians. Here are 8 standout housing policies announced in this year’s budget:

1. Canadian Renters’ Bill of Rights
   Budget 2024 announced the creation of the Canadian Renters’ Bill of Rights, which proposes several initiatives to help tenants including $15 million being allocated to a Tenant Protection Fund.
   

2. Funding for the Construction of New Homes
   The budget introduced initiatives to provide billions of dollars to fund the development of new rental units, new homes, and infrastructure projects to support the projects and new residents.
   

3. 30-year Mortgage Amortizations for First-time Buyers of New Homes
   Starting on August 1st, first-time buyers purchasing a newly-constructed home can access 30-year mortgage amortizations, a product that has previously only been available to those with a down payment of at least 20%.
   

4. Amendments to the Home Buyers’ Plan

   To make it easier to access funds for a home purchase, Budget 2024 unveiled an amendment to the withdrawal limit on the Home Buyers’ Plan, which has been increased from $35,000 to $60,000 as of April 16th.
   

5. Support for Single-family Home Suites

   To encourage the creation of secondary housing units, the 2024 budget announced $409.6 million over four years towards a Canada Secondary Suite Loan Program, run by the CMHC. This will enable homeowners to borrow up to $40,000 in low-interest loans towards the cost of adding a secondary suite to their homes.
   

6. Increase to the Inclusion Rate on Capital Gains above $250,000

   Effective June 25th, Budget 2024 proposes an increase to the inclusion rate on capital gains realized annually above $250,000 by individuals, corporations and trusts from one-half to two-thirds, by amending the Income Tax Act. This would include the sale of secondary residences and investment properties. Click here for more details
   

7. New Funds for Post-War Housing Catalog
   In December 2023, the federal government announced that it would be modernizing its post-war home design catalog, providing standardized home blueprints to accelerate the creation of new housing. The 2024 budget unveiled $11.6 million towards the development of 50 home designs, which includes plans for row homes, fourplexes, sixplexes, accessory units and modular homes.
   

8. Conversion of Public Lands into Housing

   The federal government intends to utilize public lands in order to free up space where new housing can be built, with a goal of building 250,000 new homes by 2031 under the Public Lands for Homes Plan. In Budget 2024, the government announced plans to lease public land to builders in order to lower capital costs, and review the federal lands portfolio to identify more usable lands for housing. Over the next three years, $5 million will be allocated to the Canada Lands Company to support initiatives to build properties on public lands.

Click here to read the full 2024 Federal Budget

Market commentary by Joseph Robert, Broker of Record
& JR Robert, Sales Representative

March 2024: Market Update

A few weeks into April and it feels like spring is trying it’s best to really start despite the inclement weather we’ve been having, but I guess there’s the saying, “April showers bring May flowers” for a reason. Reflecting back on the Toronto real estate market last month, in the GTA we saw the number of sales drop by 4.5% compared to March 2023 and despite listings being up 15%, overall home prices still rose modestly up 1.3%.

Many eager sellers came to market in March hoping to get a jump on the spring market as the weather looked good and there was the expectation that interest rates might soon be coming down providing more favourable buying conditions. But although we saw healthy competition among buyers helping prices to increase, many would-be buyers continue to wait on the sidelines for interest rates to come down and mortgage rates to settle leaving many listings sitting unsold.

In its third interest rate announcement for 2024 last week, the Bank of Canada held its overnight lending rate at it’s current level of 5.00% .This marks the sixth consecutive hold since July 2023, prior to which rates have been increasing from the low of 0.25% since March 2020. Depending on who you ask, sentiment seems to be that there will be at least one rate cut by the end of the year, with one possibly as early as June 5th when the next rate announcement is made. However, we aren’t prepared to make any assumptions until the Bank of Canada provides some more concrete guidance as to what they intend to do. The expectation continues to be that if and when rate cuts are announced, buyers are going to flood the market and home prices will rise in turn with the demand.

Despite somewhat tepid figures for the overall market in March, looking more closely we actually saw ‘semi-detached’ houses and ‘townhouses’ perform quite well, particularly in Central & East Toronto. In Toronto prices for semi-detached homes were up 3.0% and townhouses up 2.5% compared to last year, with sales up 9.9% and 5.3% respectively. With historically high prices and interest rates, we expect this trend to continue in these markets as families consider options that are more affordable than a detached house with more space to grow into then a condo. See the chart in ‘Market Stats’ for more details.

Looking ahead to April, we have not seen the spring market take off yet but things are starting to move. There’s been healthy competition between buyers so far, which will only continue as the weather improves and people look to close a deal before we’re into the summer. In the luxury market we aren’t seeing the same urgency from buyers who tend to be less interest rate sensitive. However, there have been some notable high-end sales lately, particularly in Rosedale, showing that luxury buyers are still interested but only if it’s for the right property, otherwise they’re willing to wait.

All-in-all we find ourselves in a fairly balanced market between buyers and sellers right now without much of an upper hand being given either way. Saying that, there are plenty of anxious would-be buyers out there waiting for the right place at the right price. Once mortgage rates come down we expect to see an influx of competition that will inevitably drive prices up, but when that time will come is anybody’s guess.

Click here to read TRREB’s MarketWatch Report

Market Commentary by Joseph Robert, Broker of Record and JR Robert, Sales Representative

February 2024: Market Update

February isn’t typically a month to look out for in Toronto real estate as the cold and dark weather typically keeps buyers at bay while they wait for Spring. However, perhaps due to the warmest February we’ve had on record or because the market assumes the Bank of Canada has stopped raising interest rates, we’ve seen a resurgence in sales activity.

We first saw a trend beginning in January with strong sales figures continuing through February 2024. The number of homes sold in the GTA last month was up 17.9% from the year before supported by a significant increase in new listings (+33.5%). Despite these substantial figures, the average home price remained consistent since last year at $1,108,720 (+1.1%), still surpassing the 5-year average of $1,008,572.

The assumption behind this resurgence is that there’s pent up demand from buyers who have been on the sidelines for the last couple years waiting for interest rates to come down, and now that there’s signs of stability buyers are getting into the market before prices inevitably rise when rates do come down. It also seems that Canadians have started to get used to the idea of higher mortgages with the ‘near-zero’ lending rates we saw after COVID far in the rear-view mirror.

Although we’ve seen a large increase in demand from consumers in the first two months of 2024, 51% of Canadian homebuyers are waiting for interest rate cuts to resume their purchase plans, according to a recent survey by Royal LePage, which means there is still room for strong sales to continue as more buyers come out of the woodwork.

The Toronto Regional Real Estate Board (TRREB) comments, “As we move through 2024, an increasing number of buyers will re-enter the market with adjusted housing preferences to account for higher borrowing costs.” Looking further ahead, considering population growth has been at a record pace and with anticipated lower mortgage costs, they expect the demand for housing - both ownership and rental - will increase over the next two years.

Click here to read the full MarketWatch Report

Market Commentary by Joseph Robert, Broker of Record &
JR Robert, Sales Representative

January 2024: Market Update & 2024 Market Outlook & Year in Review

Market Update: January 2024

Home sales in Toronto last month were up quite a bit (+37.0%) compared to the same period last year, with prices pretty much unchanged (-1.0%) across the GTA. The average price of a detached house now stands at $1,350,828 with an average condo at $681,979 in the GTA.

The common sentiment for the past few months in Toronto real estate is that it’s been “a buyer’s market without any buyers,” because supply has outweighed demand but higher interest rates are still keeping buyers on the sidelines. This remains the case especially while it’s the winter season, but we are starting to see improved sales conditions bolstered by the expectation that interest rate relief is within sight for 2024. Many are expecting a sales resurgence as a result come the spring with prices likely to rise, so eager buyers should be on the lookout and potential sellers need to start preparing to not miss out once the action begins.

2024 Market Outlook & 2023 Year in Review

2024 Market Outlook: What’s Trending Next

The direction of mortgage rates is key to where the housing market is headed in the Greater Toronto Area (GTA). TRREB is forecasting that:

• Home sales will reach the 77,000 mark in 2024, marking a substantial improvement compared to the less than 66,000 transactions in 2023.

• The projected average selling price will move closer to $1.17 million this year. This would be the second highest mark on record but still below the 2022 peak.
  

2023 Year in Review: A Look Back

Sales, prices, and new listings results in 2023 showed decreases when compared to 2022:

• Home sales dropped 12.1% from 75,047

• New listings in 2023 were down 8.6% to 142,233

• The average price of $1,126,604 for all home types decreased 5.4% from $1,190,749
  

New Homes & Condos Review & Outlook

According to Altus Group, 2023 new home sales got off to a slow start, following the trend of the last half of 2022. The highlights are:

• New condominium apartment sales bore the brunt of the slowdown in 2023

• Benchmark prices slipped by over 15% since their peak in early 2022

• If the Bank of Canada holds and possibly lowers interest rates, stronger demand in the new homes market will likely occur

Market Commentary by Joseph Robert, Broker of Record &
JR Robert Sales Representative

December 2023: The Month of ‘Wait and See’

People often wish for the new year to bring about optimism and hope as we reflect back on the past twelve months and look ahead at what’s to come. This is most definitely the wish for those in the Toronto Real Estate market as we take a look at the numbers for last month and hope 2024 ushers in a more positive outlook for the market.

In the GTA home prices and the number of sales was up compared to December 2022, unfortunately that’s not saying much considering November through January last year were the lowest prices fell to since pre-COVID, but at least we’re trending in the right direction. When we look at Central Toronto specifically, we actually see prices were down from last year but sales volume was still up significantly, especially amongst detached houses. We’re far too early to point to signs of a rebound, but what this does signal is that consumer confidence is starting to return to the market.

Luxury Real Estate in Toronto for December 2023 echoed the rest of the market, however, sales were arguably more disappointing with most sellers waiting for the market to improve, or listing and hoping to get their number in a market heavily favouring buyers. We also saw a number of new listings launched last month in the hopes of attracting buyers trying to get in under the wire to save on the new Municipal Land Transfer Tax for Toronto, which increased for residential properties over $3,000,000 as of January 1st, 2024 (see rates for 2024 below).

Rosedale did not have one sale in the month, the last being November 3rd. Lawrence Park only saw one sale but at least it was above the average price for the year. Forest Hill had five sales – better than last December’s three, but the selling prices were unfortunately well below 2022’s average for the area. It is often hard to compare and make assumptions when these areas only had single digit home sales, but generally there was a ‘wait and see’ attitude amongst buyers in the luxury space in Toronto.

The larger conversation is what we have been discussing for several months, and that is the market won’t see a strong resurgence until the Bank of Canada starts to cut interest rates, or at least signals that rate cuts are coming. Most buyers are not interested in spending significantly on a purchase now if they expect it will be cheaper to finance that purchase in the near future, despite the fact that prices are almost guaranteed to be lower now than they will be when rates do fall.

The exception to this is in the luxury market where we tend to see purchases mostly being in the want rather than need category, which offers more flexibility of course. But these types of buyers are also keen and considering houses in Toronto’s luxury neighbourhoods have been priced far above market price, it makes sense that they’re willing to wait and see what happens.

Depending on who you ask it seems like we’ll get 0-3 rate cuts by the end of the year, with reality most likely falling somewhere in the middle. Those working in real estate have been quite dovish lately announcing that we are almost guaranteed to see extensive rate cuts, the first being as early as this spring, whereas others tend to be more hawkish. Of course, it’s by no means self-serving for those in real estate to be prophesying rate cuts right around the corner…

We at Glenhome tend to be more conservative and don’t make any promises we can’t back up, but our best guess is that we’ll most likely see at least one, if not two, cuts by the end of 2024. Perhaps we could see one in the Spring but we’re not prepared to make any assumptions yet.

What this means is that there’s no rush to jump into the market right now, but if you’re thinking of listing or buying we highly suggest starting to get organized now so that if and when the market does rebound, you’re ready to take full advantage and not miss out. If you’re looking for any advice of course don’t hesitate to reach out and we’d be more than happy to provide a consultation!

All the best,

Joe


MARKET COMMENTARY BY JOSEPH ROBERT, BROKER OF RECORD & JR ROBERT, SALES REPRESENTATIVE

Source
Toronto Real Estate Board December 2023 Market Watch Report: Read Here

November 2023: It's the Most Wonderful Time of the Year…

“It’s the most wonderful time of the year…” as the song goes, but unfortunately that is not the case for those in the Toronto real estate market these days.

Not much has changed from what we were seeing last month with prices almost flat (+0.3%), sales down (-6.0%), and the number of active listings up significantly (+40.7%) in Toronto overall from the same period last year. Mostly the result of continued high interest rates and uncertain economic conditions.

But in all honesty, it’s not that surprising to see underwhelming sales figures as we approach the holiday season and peoples’ attention is all consumed by buying gifts, holiday celebrations, and winter vacations.

In November 2023 real estate prices were down from last month in all four corners of the city regardless of home type (detached, semis, condos, etc.). Some would point to this as cause for concern, but again, it’s not unusual for this time of year. On the flip side, the holiday season can often be seen as an opportune time for eager would-be buyers to snatch up a deal, especially as we get closer to the holidays and sellers no longer want to be dealing with a listing through the winter break. And although it may seem obvious, this also means anyone interested in selling should really be considering listing in the new year if they want to get top dollar.

With thoughts turning to 2024, it seems we could be approaching the light at the end of the tunnel sooner than we thought. Although not entirely unbiased, Royal LePage reports as of yesterday that they expect overall home prices in Canada to increase 5.5% by Q4 2024. Their view is that with the Bank of Canada’s latest announcement that interest rates are being held at 5.0%, they expect rates to start trending downward as early as summer 2024.

“Looking ahead, we see 2024 as an important tipping point for the national economy as the majority of Canadians acknowledge that the ultra-low interest rate era is dead and gone,”said Phil Soper, President and CEO, Royal LePage. “We believe that the ‘great adjustment’ to tolerable, mid-single-digit borrowing costs will have a firm grip on our collective consciousness after only modest rate cuts by the Bank of Canada.”

This is no guarantee of course but the prevailing sentiment amongst real estate professionals is that we’re most likely at the bottom of this market we’ve been experiencing for the past 12-18 months and 2024 is primed for a rebound. With that said, buyers should be on the lookout for potentially deals right now and sellers will need to practice patience, at least for the time being. If and when rates do eventually start to creep down, expect the demand for homes to return quickly.

Warm Wishes, Happy Holidays and a terrific New Years to all your family and friends!


Market Commentary by Joseph Robert, Broker of Record &
JR Robert, Sales Representative

Sources
TRREB November 2023 Market Watch Report: Read Here
Royal LePage Market Report (Dec 14): Read Here

October 2023: It's Not as Straightforward as it Seems

“How’s the market these days?” This is by far the most common question I get asked in conversations and usually I have a straightforward answer. However, despite promising price trends the mood in the Toronto real estate market as we head into the 2023 holiday season could best be described as subdued. Contradictory it may seem but with record-high borrowing rates and no immediate relief in sight, Canadians are concerned about what comes next. So, how’s the market these days? There’s no straightforward answer – it depends on the property and the neighbourhood.

Overall, prices in October 2023 in the City of Toronto were up 3.5% from last year across all home types but the number of sales was down -5.8% – a potential concern if the trend continues. Record population growth and competition between buyers helped maintain price levels but the number of new listings last month outweighed sales 3 to 1, a sign supply may be outweighing demand in the near term. What we know for sure is properties are staying on the market longer with no guarantee of selling at the expected market rate. Not great for sellers but good for those considering a purchase.

Why I say the market is not straightforward these days is because these city-wide trends don’t necessarily apply to different property types and neighbourhoods, particularly in Central Toronto. Detached and semi-detached houses and townhouses are actually doing quite well for the most part, all appreciating year-over-over, with condos being the only property type lagging behind last year’s prices (-1.5%).

The standout though is Central Toronto, where detached homes are up 8.3% and 11.0% on an annual and monthly basis respectively and the number of sales has not fallen. This makes sense from what we’re seeing on the ground as the luxury market has been quite robust lately, seemingly not impacted as much by monetary policy and with a scarcer number of high-end properties driving demand. Looking at the graphic below, ‘House & Condo Prices’ you can see the green symbols are concentrated in Central Toronto neighbourhoods indicating where prices have gone up since the month previous.

After, “How’s the market these days?” I’m always asked, “Where are things headed?” If only I had a crystal ball… Consensus in the industry is that once the Bank of Canada starts to ease interest rates the housing market will fiercely rebound in turn. When that may be is cause for speculation with some saying as early as next year while others expect 1-2 years. What seems to be certain is that Canadians should not expect the near-zero interest rates we grew accustomed to return for some time, if ever.

According to a recent poll by Royal LePage, 31% of all mortgage-holders in Canada say their lending agreement is set to renew within the next year and a half, about 3.4 million Canadians. Of these, about one quarter are on variable-rate mortgages that may see their payments double or even triple due to higher rates. The poll reports the majority of people are saying they are not concerned about making their mortgage payments despite the higher rates. We’ll have to wait and see if this is the case. In the meantime, speculators are keeping a close eye on how the situation develops expecting/hoping for property owners to have to sell at a discount because they can’t keep up with their new payments.

The mood in the market may be subdued, but it usually is as the weather starts to turn and the days get shorter. Home prices are strong and no one expects the demand for property in the city to wane considering the amount of people coming to Canada and the GTA. We will have to get used to higher mortgage payments but Toronto continues to be an incredible place to live and invest in. As always be careful and take your time when looking at your options, especially in this uncertain market.


Market Commentary by Joe Robert, Broker of Record & JR Robert, Sales Representative

Sources

TRREB September 2023 Market Watch Report: Read Here
Royal LePage Market Trends Report - Canadian Mortgages: Read Here

SEPTEMBER 2023: INTEREST RATES & UNCERTAINTY CREATING A MORE BALANCED MARKET

The 2023 Toronto real estate market has been a story of ups and downs, so it will be interesting to see how the story ends as we head into the final quarter of the year. The exuberance we witnessed in the spring and early summer seemed to signal at the time a return to the typical Toronto housing market we remember not long ago, with bidding wars being the norm and prices going well above list. Houses, semis and townhouses did especially well with condos lagging slightly behind. The market subsequently slowed down as it does during the summer months with the expectation we would see a strong autumn picking up where the spring left off. However, as we are now halfway through October and well into the fall season we have not seen the same demand we did earlier this year.

It seems that although Canadians may (begrudgingly) be getting used to the idea of higher interest rates since increases started last spring, the steep pace of these hikes coupled with the uncertainty of what might come next was weighing on the Toronto real estate market in September and into October. The Bank of Canada’s benchmark rate is now at 5.00%, up 4.75% since March 2022 and at a level not seen since 2001, putting a strain on buyers who may now be considering less expensive options or are waiting for rates to fall altogether.

What’s good for buyers and sellers alike is that prices are stable for now, up 3.0% from September 2022. But last month we saw home sales drop by 7.1% and the number of listings jump significantly (+44.1%), a notable shift from the spring/early summer that has changed market conditions with supply seemingly outweighing demand.

The sheer number of new listings set against the backdrop of sub-optimal and uncertain economic conditions means buyers feel they can afford to look around and wait for the right place at the right price, especially when they have to pay record-high mortgage rates. The result is a more balanced market this fall in which buyers and sellers are on a relatively level playing field, with buyers perhaps having the edge as the days pass and we head into the winter months. Over the next few months all eyes will be looking to the Bank of Canada for any sign that borrowing rates will come down at which point demand will explode, the market will move starkly in the favour of sellers, and prices will rise in turn.

Earlier this month Paul Baron, President of the Toronto Regional Real Estate Board (TRREB) said, “…the consensus view is that borrowing costs will remain elevated until mid-2024, after which they will start to trend lower. This suggests that we should start to see a marked uptick in demand for ownership housing in the second half of next year, as lower rates and record population growth spur an increase in buyers.”

Phil Soper, President and CEO of Royal LePage echoed these comments saying, “Slower activity has allowed critically low inventory levels to build marginally in many regions, yet the quantity of homes available for sale in this country remains well below the level needed to keep a lid on property price increases,” Soper continued. “Once interest rates begin to ease, even by only a small amount, we expect buyers will return to the market in large numbers and the relentless upward march of home prices will begin again. At its root, housing supply remains out of step with the growing need for it.”

All else being equal, we don’t expect much to change between now and the rest of the year. Royal LePage has revised their year-end forecast and now predicts the aggregate price of a home in Canada will increase 7.0% in the fourth quarter of 2023, compared to the same quarter last year. The previous forecast (+8.5%) has been revised downward to reflect softer activity than expected in the third quarter, which resulted in a modest decline in prices in some markets, including Toronto and Vancouver.

“With activity slowing, home prices softened in some of our major markets over the last three months, following a stronger-than-expected second quarter. Prices remain up on a year-over-year basis, with today’s stable market standing in sharp contrast to the steep declines experienced in the third quarter of 2022,” said Phil Soper . “While trading volumes in most regions remain sluggish, Canada’s housing market is on solid footing, with pent-up demand building. We don’t anticipate a material change in property prices through the remainder of the year.”

The tides of Toronto real estate are always changing in the near term, but what remains constant is this incredible city of ours. The roads may look slightly different, transit lines are changing, and new buildings are going up everywhere but the life and vibrancy isn’t going anywhere! With more people coming here each year the city will continue to rapidly grow and so too will the desirability for real estate.

Market Commentary by Joe Robert, Broker of Record & JR Robert, Sales Representative

Sources
TRREB September 2023 Market Watch Report: Read Here
Royal LePage Market Trends Report: Read Here

Toronto Market Stats: September 2023

July 2023: The Dog Days of Summer

The Toronto real estate market this July had a similar story as June did; home prices, home sales, and new listings were all positive compared to last year but sales have cooled slightly since last month. There are several factors behind this trend, none of which are all that surprising nor seriously concerning considering where we expect the market to be heading.

For context, this Spring marked the turning point for Toronto real estate coming out of the pandemic where we saw a considerable amount of new listings, record sales, and lots of bidding wars between buyers. Coming from this and heading into the warmer months, it’s only natural for demand to wane as people’s thoughts move off real estate and on to the good weather and summer vacations. This season is traditionally a slower period for home sales compared to the Spring and Fall and from what we’ve been seeing this year is no different, which is mostly to blame for prices being down slightly compared to April and May 2023.

There is concern of course among buyers about higher interest rates and the affordability of new mortgages, especially for first-time buyers; however, we are seeing that many would-be buyers have gotten used to the higher borrowing costs and have factored it in when making the decision to buy. Inflation and further interest rates hikes are still potential worries, but if the Bank of Canada can telegraph their decisions and not make any drastic changes prices should hold.

The month of August may echo the trends of June and July, but we anticipate September will be a strong start to the Fall. Those who didn’t sell this Spring and saw the record-breaking sales will be preparing to list, and potential buyers tired of paying Toronto rents may be encouraged by the short-term price declines. Now is a great time to buy as properties are staying on the market for longer and competition is down, but I wouldn’t wait too long because soon enough we expect the bidding wars to start again. If you’re thinking about selling, we suggest seriously considering to list come September or October when buyers are back from holidays and the market ramps up again.

June 2023: Good News Heading Into the Summer

Now that we’re into July and the Canada Day long weekend has come and gone, it looks like we’ve reached the end of what was a very strong spring market where we saw prices in June surpass last year’s figures, despite being down slightly from last month.

The strong figures are being driven by a huge increase in demand from buyers, assisted by a lack of supply out there. Last month alone there were 16.5% more sales than the same period last year. The looming threat of an interest rate increase has tempered exuberance slightly but for the most part it seems buyers have gotten used to the idea of higher mortgage rates as long as they don’t move much more. Everyone will be paying attention to the Bank of Canada’s decision tomorrow that should signal where borrowing rates might be heading next.

Going into July and the summer season, we expect the market will cool down slightly as it inevitably does while people enjoy the weather and focus less on real estate. That being said, this could be a great time for buyers who have been observing from the sidelines to put in offers without as much competition. And for those thinking of selling, it appears that things are set for a strong September/October with a continuation of the upward sales trend we’ve experienced so far this year, so now may be the time to start preparing to list.

As you can see in the chart below, home prices in Toronto have still not matched the peak witnessed in February 2022 but they are nearing closer to it. Based on the positive figures the last few months, Royal LePage has even adjusted their 2023 forecast from slightly negative or flat to slightly positive on a year-over-year basis. If this holds true, there could be record sales again come 2024.

It’s impossible to know what comes next, but considering the very tight housing supply, expensive rental market, and influx of new people moving to Toronto every day, signs suggest the Toronto real estate market will continue improving.

May 2023: Lots Can Change In a Few Months

Since last year all we’ve been hearing in Toronto real estate is that the “bubble has burst” or that we are “still rebounding from the market correction”. But it is amazing the change a few months can make.

Prices are still down slightly (-1.2% overall) from last year, but this year alone we’ve witnessed double-digit appreciation in home prices overall (+15.2%), and in Central Toronto price are up 39.0% for detached homes and up 7.6% for condos. The number of sales is also up about 25% since May 2022 showing people are encouraged about the prospects of buying, but a shortage of new listings is making it very competitive out there, which has also contributed to the increase in prices recently.

Furthermore, despite the steep rise and subsequent drop in prices Toronto has actually seen steady growth over the last three years with a 7.94% improvement in overall prices across the city since 2021.

The trend in home sales over the last year or so is a direct result of Canada’s interest rate policy with the goal of reigning in inflation caused by the pandemic. When rates started to rise, home sales stagnated while buyers adjusted to the idea of higher borrowing costs. Now that they have, we are seeing intense interest from potential buyers; however, it will be telling to see what happens now that the Bank of Canada has introduced another rate hike, albeit just 0.25% for the time being. If this is a sign of more hikes to come, it could dampen the market rebound we’ve seen this year so far.

June tends to be the month that the spring market winds down, but considering the late start this year we anticipate strong sales to continue at least through the end of the month. Thereafter things should quiet down for the summer before picking up again in the fall as usual. By then we hope to see even more confidence in the market with lots of new listings, but this may depend heavily on the direction interest rates are going this summer.

Full Report: https://trreb.ca/files/market-stats/market-watch/mw2305.pdf

April 2023: Spring is Around the Corner... I Promise

The real estate market stats for Toronto were just released noting that the average price for a home in April 2023 was down 7.8% compared to last year. In the past this would be a huge shock for Toronto but lately it’s come to be expected, a result of the market correction brought on by higher mortgage rates. However, we are trending in the right direction considering in January, February, and March prices had been down 16.4%, 17.9%, and 14.6% respectively.

General sentiment among those we’ve been talking to echoes this trend as well. People have been waiting for a year or so for the market to show some consistency before they can feel comfortable listing or making a purchase. We aren’t seeing the exuberance witnessed pre-pandemic or during 2021 but things are moving in the right direction, and we anticipate it won’t be long before bidding wars are the norm again.

For now, we are experiencing a relatively ‘balanced’ market. That’s not to say there isn’t still price uncertainty out there and unique situations, but for the most part properties are being priced fairly and we’re seeing them sell for about 5-10% over asking or less. Properties that require work are selling for less with conditions being accommodated, and terrific ‘move-in ready’ properties are going quickly after potentially receiving multiple offers.

The beginning of May started on the backend of two weeks of straight rain, seemingly reflecting the mood in Toronto real estate. But we’re starting to see the sun poke through and my feeling is that the Spring market will get into full swing with the arrival of the good weather. We are seeing lots of new listings come out and more buyers are getting interested as well. Only time will tell, but now is a great time to consider making moves if you were mulling over your options this winter.

March 2023: Hope Springs Eternal

Now that the long weekend has passed and the weather is beginning to turn for the better it is a sign we are officially into the Spring Real Estate Market. Historically an energetic period for real estate, it will be telling to see if April shows signs of the market warming up again after a long, dark winter. Unfortunately, as many could expect the numbers for March were down across the board as the mix of poor weather and uncertain financial markets (moving interest rates and U.S. bank stability concerns) provided enough reason for those looking to buy or sell to wait and see.

In March 2023 home prices in the GTA were down 14.6% for an average of $1,108,606, actually an improvement over February 2023 which was down 21.8%. To pile on top of that, compared to last year the number of sales was down 36.5%, the number of new listings down 44.3%, and the average days on market was over twice as long. We need to start seeing more quality listings come out to kickstart things!

I truly believe that now that the long weekend is behind us we will start to see the Spring market start up. It won’t be the crazy volume or prices we saw last year at its height, but we will see some stronger numbers both in sales and volume. There have already been signs of this with more robust sale prices in the luxury space and instances of bidding wars with 10+ offers in the mid-range market. The main difference compared to a few years ago is that properties are no longer guaranteed to sell over-asking, sight unseen. What is selling quickly for over-asking are high quality homes that don’t require major renos and are priced according to the market today, not the prices we were seeing last winter.

Furthermore, there has been lots of noise recently about interest rates and for good reason. Just three years ago it would have been almost unimaginable to see interest rates at 4.5% and mortgages over 6% when we’d grown accustomed to sub-2% credit for the last decade. However, it seems that buyers and sellers are starting to settle in to the new reality of higher rates, at least now that they seem to have stabilized, and are comfortable considering a purchase or sale without the fear of buying at the top or selling at the bottom.

This winter may not have been the sunniest period for Toronto real estate as everyone re-adjusted out of the pandemic but hope springs eternal and there is reason to be optimistic for where the housing market is headed this year. Now is a great time to buy if you can find the gems out there before we anticipate more listings come out next month and other buyers start to notice, and sellers need not wait to list but should be realistic about their expectations and not expect to get February 2022 prices.

Market Commentary by Joe Robert, Broker of Record & JR Robert, Sales Representative

Real estate activity in Canada’s cottage country returns to seasonal norms after more than two years of pandemic-fueled exuberance

HIGHLIGHTS:

• After two years of intense competition, Canada’s recreational property markets have slowed & returned to traditional seasonal sales patterns

• Recreational properties in Canada are up 32% since the pandemic began in 2020

• The price of a home in Ontario's recreational regions is expected to decrease 5.0% in 2023 to $603,060

Following a period of relentless buyer demand and fast-rising home prices during the pandemic real estate boom, Canada’s recreational markets are anticipating more subdued activity levels and price declines in 2023.

According to the recently-released Royal LePage 2023 Spring Recreational Property Report, the aggregate price of a single-family home in Canada’s recreational regions is forecast to decrease 4.5% in 2023 to $592,005, compared to 2022, as activity in the market wanes. This is due to reduced demand as a result of economic uncertainty and a lack of available housing stock, which has helped to keep prices stable. Despite a modest decrease expected this year, the national aggregate price would remain more than 32% above 2020 levels, after two years of double-digit price gains in the country’s recreational real estate market.

In 2022, the aggregate price of a single-family home in Canada’s recreational property regions increased 11.7% year-over-year to $619,900. This follows year-over-year price gains of 26.6% in 2021. When broken out by housing type, the aggregate price of a single-family waterfront property increased 9.5% year-over-year to $736,900 in 2022, and the aggregate price of a condominium rose 16.6% to $432,000 during the same period.

“After two years of relentless year-round competition, Canada’s recreational property markets have slowed and returned to traditional seasonal sales patterns,” said Phil Soper, president and CEO, Royal LePage. “While interest rate hikes have less of an impact on the recreational market than homes in urban settings, because families typically put more money down and borrow less, general consumer inflation combined with a severe lack of inventory has dampened sales activity. Buyers who are active in today’s market appear willing to wait for the right property – a sharp contrast to what we experienced during the pandemic.”

While low inventory poses a challenge for buyers looking for that special cabin or lakeside cottage, the coinciding contraction in demand has resulted in a return to more normal market conditions.

“Recreational homebuyers tend to purchase for leisure and life-enriching purposes. Call it a want versus a need,” added Soper. “Unlike many city buyers who may need to acquire a principal residence quickly, secondary home purchasers often have the benefit of time to find the right property for their specific needs.”

Watch Royal LePage’s CEO Phil Soper comment on the spring recreational property market in a discussion with CP24 last week in the video below.

ONTARIO:

In 2022, the aggregate price of a single-family home in Ontario’s recreational property market increased 7.3 per cent year-over-year to $634,800, compared to 2021. During the same period, the aggregate price of a single-family waterfront property increased 8.9 per cent to $1,006,600, while the aggregate price of a condominium increased 15.1 per cent to $510,900.

“After two years of historically high pandemic-driven sales, activity in the recreational market came to a comparative standstill in the last half of 2022. Rising interest rates, buyer fatigue, and lack of inventory all played a role,” said John O’Rourke, broker, Royal LePage Lakes of Muskoka. “Early signs this spring point to a more balanced market where inventory levels and sales are trending in line with historical norms. Traditional cottage buyers – end users that plan on enjoying their property – are still engaged and seem eager to jump back into a market in which they are not competing with the investment-focused buyer; a prominent player during the pandemic boom.”

The aggregate price of a single-family home in Ontario’s recreational regions is forecast to decrease 5.0 per cent in 2023 to $603,060.

KEVIN BYLES’ THOUGHTS:

Glenhome Real Estate’s recreational property expert notes that CREA (Canadian Real Estate Association) reported in February that only 29 waterfront properties were sold in the Lakeland region, which includes cottage-heavy areas such as Muskoka, Haliburton, Perry Sound, and Georgian Bay. That represents a 62.8% drop in the market from last year.

The lack of sales is due in part to low inventory levels. There aren’t many waterfront properties on the market right now and this has kept cottage prices stable and protected from a price correction. However, the market could change this Spring as local agents anticipate a flood of new listings to hit the market.

With the pandemic subsiding and more people going back to the office, paired with higher interest rates, the demand for recreational propertied has waned coming out of 2022 moving into 2023. That said, the market is becoming more balanced between Buyers and Sellers. Now is a good time to consider recreational property.

For those looking at recreational property the ‘key’ consideration in this market should be affordability and value, which is primarily based on proximity to the GTA (commute time), local amenities (shops, services, medical, etc.), and the type of building and property (lake quality, access, amount of land and shoreline).

Here are some brief notes on some of the ‘cottage-heavy’ areas near the GTA:

Muskoka
- North of Barrie/Orillia starting at Gravenhurst representing a series of linked and land-locked lakes.
- Consists largely of luxurious cottages.
- Commute times will vary depending on location but typically about 2.5-3.5 hours
- Average price for waterfront property is about $1,700,000
- CREA recently reported that the area is low on inventory

Kawarthas
- Located northeast of the GTA, this area represents a chain of lakes that feed into the Trent
   Lakes system
- Average commute time from the GTA ranges from 1.5-3.5 hours, depending on location
- Average price ranges from $700,000 to $1,000,000
- The area is currently experience low inventory

Grand Bend
- Located north of London with lakefront properties along Lake Huron. Known for having great beaches!
- Average commute from GTA is about 2.5-3 hours
- In March this area has 39 waterfront listings available with an average price of about $1,000,000

Bay of Quinte
- West of Kingston this area is on a long and narrow body of water that is connected to Lake Ontario.
- Average commute from GTA is about 2.5-3.5 hours
- According to local real estate agents the area is witnessing an inventory uptick, reportedly up 20% since December 2022
- Pricing fluctuates but waterfront properties are typically about $800,000, dependant on many factors (lot size, location, waterfront, etc.)


Read More:
Royal LePage 2023 Spring Recreational Property Report
Royal LePage Blog: Real estate activity in Canada’s cottage country…
2023 Recreational Single-Family Home Price Forecast

Commentary by Kevin Byles, Sales Representative
Originally sourced from Royal LePage 2023 Spring Recreational Property Report

February 2023: Good News or Bad News?

You’d be forgiven for thinking it’s all bad news when it comes to Toronto real restate from what the headlines are saying; “One year after the housing peak, a record drop in prices…” from the Star and “Buyers and Sellers adjusting to new normal” in The Globe and Mail, but the headlines (and the big chart below) don’t tell the full story.

Prices throughout Toronto and the GTA have in fact dropped quite a bit from last year, down 17.9% overall and 18.1% for detached homes in Central Toronto. But this is no surprise when in February 2022 Toronto home prices were at their all-time high before the interest rate hikes cooled things down.

While it’s not positive that prices are down year-over-year, it’s not all bad news when we look at how much growth there’s been in Toronto real estate over the last five years, even in the midst of a pandemic. As shown in the chart below, compared to February 2019, 2020, and 2021 the average price of a home in 2023 is up 40.5%, 20.4%, and 4.9% respectively.

So, is this Good news or Bad news? It’s bad news if you bought a house last year and were hoping for a quick flip. However, for those that purchased their home a few years ago or have owned for some time now and are on a typical 5+ year investment plan, the news is probably good if not great.

Market Commentary by Joseph Robert, Broker of Record

2022 Year in Review & Market Outlook for 2023

The past year was an interesting time for real estate in Toronto, not necessarily for the highs and lows but because coming out of the pandemic we had to adapt to new challenges for buyers and sellers not seen in years. Rapidly rising interest rates, inflation, price adjustments, longer times to sell, change in power from sellers to buyers, and uncertainty among others.

Considering that in 2022 Toronto real estate prices hit their peak in the beginning of the year and then suddenly dropped off, the Toronto Regional Real Estate Board (TRREB) predicts the need for cautious optimism in 2023 with prices remaining flat early on and then increasing as the year progresses.

READ: TRREB 2023 Market Outlook & 2022 Year In Review

READ: TRREB 2022 Market Outlook & 2021 Year In Review

In last year’s report, TRREB predicted annual home prices would increase 12% in 2022 ($1,095,333 to $1,225,000). They were on track for the first five months of the year but what was unexpected was that the Bank of Canada would start rapidly increasing interest rates beginning in March. As a result, mortgages became more expensive and harder to obtain for buyers so prices dropped in turn and the market cooled, ending the year up only 8.6% for an average price of $1,189,850. Overall, still a strong year-over-year increase.

This year’s forecast is predicting that average annual home prices will drop for the first time in recent history by 4% from $1,189,000 in 2022 to $1,140,000 in 2023. TRREB predicts that prices will remain relatively flat in the first half of the year, but that competition between buyers in the latter part of 2023 will cause prices to increase by year-end. On a monthly basis, expect to see consistent price drops in January to April 2023 compared to 2022, when the market was at its peak towards the end of the pandemic.

The charts below show Toronto’s yearly average sale price and the number of transactions from 2019-2023’s projections by TRREB. As you can see, even though TRREB is predicting that overall prices will fall by 4% this year, they would still be up a total of 39.1% since 2019. Those are gains of almost 10% per year and that’s through a global pandemic.

Looking beyond the sales numbers, Ipsos (TRREB’s market research company) found through surveys and interviews that 28% of respondents said they would consider buying a home in 2023 (up 2% from 2022), 46% of first-time home buyers said they intend to purchase (up 7%), and 39% of homeowners said they would consider selling (up 4%). This speaks to the positive outlook the general public has for the housing market going into 2023.

There are other reasons to be optimistic for Toronto real estate this year. As immigration into Canada continues to grow, the GTA will continue to be the single biggest beneficiary of new people moving in who will looking for homes, both in the home ownership and rental markets. As we know, Canada and especially Toronto and Ontario specifically are already dealing with a large housing shortage of about 1.8 million homes nationally. All levels of government are taking measures to make new home construction easier and cutting much of the red tape surrounding this construction.  That said, this won’t happen immediately and pressure on buyers will continue for the foreseeable future supporting home prices. Builder’s also remain “cautiously” optimistic in the face of the new economic headwinds.  Demand for new condominium units is expected to remain consistent with current levels throughout much of the year. 

On the surface the sales numbers for 2022 don’t paint the nicest of pictures, but when you dig a little deeper and take a longer term perspective, we can see the Toronto housing market has been relatively stable and actually done quite well through the uncertainty brought on my the pandemic and resulting chaos. 2023 will be the year to hit the reset button on home sales and prices but by the end of the year we should be back on track going into 2024.

Commentary by Joseph Robert, Broker of Record

Market Update: What Happened in 2022 & What’s Next in 2023

Getting a grasp on the ebbs and flow of the Toronto real estate market has always been difficult, a mixture of math, forecasting, experience, and hearsay, but this is especially true now as we deal with the whiplash of a two-year pandemic that turned the market on its head. You’d be faultless for asking the questions, “What’s going on and what’s going to happen?”

Looking back at the average price of a home in 2021 compared to 2022, on the surface it appears things are going great with yearly average prices rising from $1,095,333 to $1,189,850 respectively, an 8.6% jump. But these gains are mostly the result of the buying frenzy we saw in the first few months of 2022, which drove prices up but tapered off starting in the spring with the introduction of sudden and significant interest rate hikes.

From a different perspective, in the GTA the average price of $1,051,216 in December 2022 was down 9.2% from December 2021, and down 15.4% from January 2022. Simply put, the average price for a home has dropped significantly from the peak in February 2022. Although, prices are still higher than they were before the pandemic began.

The chart above is the Monthly Average Price in the GTA from 2020-2022 and helps show quite clearly the timeline of Toronto real estate since the pandemic began. The two most significant dates being April 2020 (first month of lockdown) and March 2022 (first interest rate hike since 2018) when the market reacted negatively in response to these major events. The difference being that in 2022 ever-increasing interest rates had a much deeper impact on prices as mortgages became more expensive and harder to obtain.

What are we seeing now? Well, the Toronto real estate market is in a very interesting position and not all is necessarily clear, particularly in the short term. In the long term, Toronto is a world-class city constantly struggling to supply enough homes to meet the demands of those moving here, so you can be sure prices will rise. In the short term, we are seeing contradicting signals that make it difficult to come to conclusions with absolute certainty about the next year or so.

Yesterday the Bank of Canada raised rates another 0.25% but indicated it is not planning on raising them further. Could this signal we are potentially at the bottom of the market and prices will start to rise? Potentially, but it may take a few months for the market to respond in turn.

On the ground, home prices have held up much better in Central Toronto than those areas outside the city, up 5.8% for detached houses and 2.4% for condos from the same time last year. The market is also much fairer for buyers now than it has been in any recent history with sales often going for close to or under asking, and conditions, such as financing and home inspections, being accommodated.

That’s not to say it isn’t still competitive out there for buyers. The number of available listings was down 21.3% in December 2022 from last year, so there aren’t that many options and the good places go quickly if they are priced well. But one of the biggest hurdles right now for buyers and sellers is determining what is the right price. Should we look at sales in the peak or the valley for comparison?

What’s next? That’s up for debate. It’s good that interest rates have stabilized so Canadians can prepare accordingly and have a better expectation of where prices will settle at. In turn, hopefully this also helps give homeowners the confidence to list their properties no longer fearing that they may be selling at a low point. Consensus amongst experts seems to be that 2024 looks promising for Toronto real estate and we will be back to business as usual soon enough. 2023 on the other hand looks to call for cautious optimism. But remember, no matter when you get into the market make sure to take your time, do your due diligence, and always rely on trusted advice.

Commentary by JR Robert, Sales Representative

December 2022: What is the True State of the Real Estate Market?

This is the question on most people’s minds with respect to Toronto and Canadian real estate.  For the last 4-6 months we have seen poor performance in the three major market indicators we look at; year-over-year average sale prices on the decline, Days on Market has gone up, and sales transaction volume is also down by a significant amount.

But do these figures tell the whole story? For those who purchased in 2021 and were looking for a quick sell in 2022, and especially those who purchased in the winter of 2022 when we saw year over year spikes of more than 20% and now want to sell, this is the story and possibly not a great one at that.  But for those who have owned their homes longer and were not necessarily looking for the quick flip, the story is much less bleak if not positive.

Looking at the month of December, in 2020 the average sales price in the GTA was $932,000, in 2021 it was $1,157,000 and in 2022 it was $1,057,000.  Ignoring the spike in 2021, that is still a 12% increase in average price over 2 years – not bad. Stepping back and looking at the average annual sale price over the last three years, the picture is even better. In 2020 the average price was $939,000, 2021 was $1,095,000 and 2022 was $1,189,000, a 26% increase.  I preface these latest numbers with the knowledge that January, February and March 2022 really raised the average home price for 2022.

Last month, in December 2022 the year-over-year average Days on Market grew 110% from 19-40 days and the number of transactions was down 48%. Prices were also down 9.2% across the GTA from the same time last year, but in Central Toronto detached homes were up 5.8% and condos up 2.4%. This speaks to the news that some areas outside Central Toronto witnessed unrealistically high sales during the pandemic, which are now unsustainable that the market has turned. Central Toronto and neighboring areas are holding their own better in these times as location, accessibility to transit, walkability, scarcity of land, and a vast array of other reasons prove why the area is less cyclical.

What does this mean for 2023?  Prices in the first quarter of 2023 will drop significantly compared to the previous year. It is impossible to see anything else considering how much prices exploded in January through April 2022. Furthermore, as Royal LePage reports prices in both freehold (detached, semis, townhouses) and condos will be flat this year compared to last. I tend to agree that this winter will see a further cooling off period while the Bank of Canada decides what to do with interest rates and buyers and sellers wait for more certainty in the market. In the second half of 2023 we will possibly see the Bank of Canada temper their interest rate hikes, which should spur a rebound in the market and lead us into a more ‘normal’ 2024. The reality is that even though the foreign buyer tax and vacant home tax have come into effect in Toronto, there is still massive immigration, low unemployment, and a large shortage of homes.

In all, Toronto still remains a very good place to invest in real estate. But as always, you need to be prudent, understand your objections and budget and get good, strong advice from a balanced real estate professional who understands the market and has your best interests in mind.

Commentary by Joseph Robert, Broker of Record

November 2022: Interest Rates Continue to Impact Sales

The sales figures for November 2022 continued the downward trend we’ve witnessed this year since interest rates were first hiked in the spring.  Since the height of the market in February 2022 average prices have now dropped from $1.34 to $1.08 million. With such a shift in a short period of time it can be easy to be pessimistic about the Toronto real estate market, however, we always knew a sharp increase in interest rates would temper buyer appetites and lead to less sales and lower prices in the short term. Prices may be down 7.2% from last year, but taking a longer term perspective average prices are still up 12% from November 2020. Just like the highs of the winter of 2021 was not a true reflection of the Toronto housing market, the same can be said for the lows of the fall of 2022.

What is unhealthy for real estate is a lack of consistency in the market and erratic movements in price month-by-month. When the market cannot agree on what the fair price is it makes purchasing or selling a much riskier proposition, both financially and mentally. This is why it is more important now than ever to make your real estate decisions based on sound personal financial planning.  Do not buy for more than you can reasonably afford, try to sell when you want to, not when you have to, and above all never live outside your means.  These are cornerstones of family and personal financial planning but are even more important when there are adjustments or minor corrections in the real estate market as there are now.