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