TRREB’s August GTA Data.

August and July had come and gone, leaving many scratching their heads as to how it is possible for 2 months to disappear so quickly. On the other hand, houses for sale in Toronto and the GTA, aren’t disappearing from the market as easily as they used to. The slower market pace in the summer months is typical to any real estate market, though the past 2 years of lockdowns (and freakishly low interest rates) had made the summers of 2020 and 2021 abnormally busy.

How Did the Current Market Conditions Affect Houses for Sale in Toronto and The GTA In August

Despite the fact that August is usually a more tranquil month when compared to July for many reasons, this year this was different (I bet this is something that everyone have become quite accustomed to hearing lately). Houses for sale in Toronto and the GTA were absorbed at a much slower pace compared to the year before. The 5,627 sales this August signified a 34.2% drop from the previous year. At the same time, this was a considerable improvement when compared to the previous month – a spike of 11% in sales.

The markets also added just under 15% more inventory month over month. This, coupled with the anticipation of a rate hike on September 7^th, has driven the buyers to spend less time on their summer activities and a bit more time on buying real estate. This uptick in activity had a positive effect on the sale prices, 0.9% increase across all asset types year over year and 2.1% increase month over month. The average sale price for both, the Toronto and the GTA markets has now reached $1,079,500. These statistics, along with the Home Price Index, point out to the fact that more expensive homes sold more often in August.

Another interesting factor to point out is that with the Sale to New Listings Ratio (SNLR) of 53% this August, the market remains within the ‘balanced’ territory and not in the ‘buyers market’. The sale to new listings ratio is a tool that is used to determine whether the market is within “seller’s”, “buyer’s” or “balanced” territory where 60-100% marks a ‘sellers’ market. A good indicator of that is that the listings are staying on the market for 61.9% longer than last year (34 days vs 21 days).

Key Takeaways from August for Different Asset Types

DETACHED HOMES

The purchases of detached houses for sale in Toronto and the GTA spiked 18% over last month (2,595 sales). The average price of a detached home has reached $1,379,700 (up 1% since last month). Detached homes were the only asset type that rose in price since last month, albeit their price did slide down 3% year over year.

CONDOS

Condos remain the most affordable option, with an average price of $711,321 (down 1% since July). Condo sales were up 7% since month over month (at 1,028 sales).

SEMIS DETACHED HOMES

Semi detached homes have reached an average price of $1,127,429 – an 11% dip from July. The sales dropped 10% since last month with only 159 sales in August. Like detached homes, semis dropped 3% in price year over year.

CONDO TOWNHOUSES

Condo townhouses dropped 13% in sales with only 121 sales in August. The prices dipped 4% to the average price of $818,935 year over year.

RENTAL PROPERTIES

With more people coming back to work in the urban areas, the rental prices spiked drastically year over year. Since last August, the rental rates have jumped almost 18% for a 1 bedroom dwelling. More people coming back into the city also means that there is a less of a supply of available rental units. In fact, there were 42.6% less units available for rent this August when compared to August 2021.

Rising Interest Rates and How They Will Affect the Market Going Forward

The interest rate hikes that commenced this past March have left many potential buyers on the sidelines in spring and summer this year. There is no way of knowing what the Bank of Canada’s next move would be. The news change on a daily basis, which adds to the reluctancy of the buyers to enter the market until after the announcement on September 7.

With that being said, the general market sentiment is that a balanced market is an uncommon phenomenon in Toronto and the GTA real estate markets and that with an increased inventory of homes, this fall could be a good time to make a purchase. This is especially true for those buyers who can stomach the higher interest rates in the short term, before the BoC drops them again in the future.

The prices have started to dip on year to year basis for the first time since the introduction of interest rate hikes earlier this year for some asset types. Many buyers who have been waiting for more favorable market conditions could be soon ready to re-enter the market if the upcoming rate hike will result in further discounts.