September 2022: Autumn Ushers in Cooler Temperatures & Falling Prices

We are midway through October and the change in temperature seems to be reflecting the cooler fall market. Looking back at the September sales figures released a few weeks ago we saw that home prices were down 4.3% from the same time last year. This figure paired with an increased in the average days on market of 84% and a decrease in the number of transactions by 44% provides a very different real estate landscape in the GTA from last fall/winter. Condos faired better, up 2.6% in Central Toronto, but detached home prices were down -14.3% year-over-year.

Real Estate analysts, agents and speculators will all be adjusting their expectations for the late fall and winter as we enter into the 4th quarter of the year. Personally, I expected prices to hold steady this fall after steep and sudden interest rate hikes pushed prices down as nervous buyers stayed on the sidelines. However, the continued hikes have with fear of more to come are having a critical impact on buyers’ enthusiasm. Now, I anticipate a drop in sales volume of about 4-8% continuing into the end of the year with the overall end of 2022 being flat compared to 2021. To put things in perspective, remember that in January, February, and March we were seeing price increases of over 20% each month.

To note, some of the doomsayers were predicting a 20% drop in prices which won’t happen. We can’t say for certain that smaller markets that don’t have the same demand as Toronto won’t be hit harder, but the GTA should be insulated.

As always in changing times like these it’s important to take a cautious real estate outlook, seek solid quantifiable advice, stay within your comfort zone, and not let over exuberance take over.

Commentary by Joseph Robert, Broker of Record