TRREB’s November Real Estate Data.
Toronto, December 3rd, 2022
By Ivan Kalinin
Normally, fall months in real estate represent a vibrant market with large numbers of properties selling with multiple offers in a matter of days. Of course, this time is different, and the market has remained flat and uneventful (boring even), with properties staying on the market for much longer. With that said, we are starting to get a pretty good idea whether the Canadian real estate has bottomed out and what to expect as we are headed into 2023. As always, there is a lot to unpack here, so buckle and let’s begin.
The real estate market has continued to be influenced by the impact of the interest rate hikes. The sales have been dipping for the past few months and as a result there were less listings making it to the market in November. The low inventory has been upholding the average selling prices between $1.08-1.09M since August. It certainly is not that exciting and bustling marketplace we are used to here. Instead of the predictions of the experts, the market did not tumble like a rock. Yes, it didn’t soar either, but the point is that it remained uneventful.
The total sales have dipped in the GTA by 49% since last year, but haven’t dropped since the October levels. While it is common for sales to taper off around this time of year, sales haven’t reached this level in more than 10 years.
According to the TRREB President Kevin Crigger, the increased borrowing costs are a ‘short-term shock’ to the housing market and the demand will pick up strongly in the med-long term. He attributes this bullish sentiment to the massive immigration that Ontario is about to receive in the next few years.
The housing supply simply hasn’t increased enough to support such amount of people. In fact, many builders are halting construction currently due to the higher costs of materials and labor. And while measures such as More Homes Built Faster Act are a step in the right direction, there is still a lot to be done in order to ensure that the anticipated population growth is supported by the housing market.
On the year-over-year basis, the average selling price (across all asset types) has dropped by 7.2%, with the detached and semi-detached homes dropping in price more so than the cheaper types of homes.
According to the TRREB Chief Market Analyst Jason Mercer, even though the prices are dropping year-over-year the ‘downward price trend experienced in the spring has come to end’. This is because the prices have been flatlining month-over-month since this summer.
So where do we go from here? The latest interest rate hike took place on December 7 and the Bank of Canada has raised it by another 50bps. With that being said, they clearly started change the narrative from the gung ho interest rate hiking until the inflation comes down, to a wait and see approach. This can be interpreted as a pivot in the tightening policy, which usually signifies the end of the restrictive policy and precedes a quantitative easing cycle. So many people believe that if there is another interest rate hike that will be place next year, it will probably be a 25bps if at all, and even more likely that there won’t be anymore hikes taking place next year and the BoC will pause the quantitative tightening, before dropping the rates sometime Q3 or Q4 next year.
In other words, if you are trying to time the market, I would not hold your breath anymore. Yes the market is slow and is still digesting the higher borrowing costs, but the overall sentiment is starting to change in favor of the market rebounding as early as spring. One of the factors to support that is the average price that is hovering at about the same level, which is a sign for many that the Canadian real estate has found its bottom.
TORONTO REAL ESTATE MARKET STATS
THE GTA REAL ESTATE MARKET STATS
If you like talking real estate half as much as I do and are going to participate in the market in 2022, come chat and have a coffee. And if you are looking for a property as an investment, remember our super-popular private investment tours now booking in early 2022. Click here to book.
Ivan Kalinin is a sales agent at Key Toronto Real Estate Group. Zoocasa Realty Inc. – Brokerage independently owned and operated, He can be reached at 416 858 8085. Not intended to solicit clients already under contract.