TRREB’s May GTA Data.
Toronto, June 5th, 2022
By Ivan Kalinin
The Toronto housing market is continuing its slowdown. The newly reported interest rate of 1.5%, an increase of 50 basis points granted by the Bank of Canada on June 1st, sparked a new wave of anticipation and market cooldown in May. As a result, the sales dipped on both, annual and monthly fronts.
Coupled with the decrease in sales, active listings were up on a year-over-year basis by 26%. It comes as no surprise, since the inventory stays on the market for longer as more homes are being listed for sale. This phenomenon results in a more balanced market conditions and pleasant buyer experience.
The past 3 interest rate hikes this year, coupled with the looming future borrowing rate increases promised by the Bank of Canada create a short-term psychological effect on buyers. Homebuyers are now expecting new price bottoms and are taking their time to absorb the inventory.
Some might think that this signals a market crash, however there are aspects to the current situation that are propping up the demand. According to David Crigger, The Toronto Real Estate Board President: “as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration”.
In other words, despite the rising inflation, supply chain disruptions and geopolitical conflicts that 2022 has presented us with, we are still likely to see a strong market this summer. This Toronto housing market is quite distinct from the one last year, where the buyers actually have the opportunity to negotiate and protect themselves by allowing some time to do their due diligence when buying a home.
Toronto Housing Market: Average Sale Price Settles, Detached and Condos are in High Demand
Average sales price in May was $1,212,806, with an annual growth rate of 9.4%, signalling that the market is still strong. From the month-over-month perspective, the prices are stabilizing from the growth rates in Q1. Overall the prices have dropped 3.3% across all asset types. The price declines are mostly noticeable outside of Toronto month-over-month: -11.6% in Oakville, -8% in Orangeville, -10% in Oshawa, for example.
However, with low unemployment, rising incomes and immigration getting back on track to its pre-pandemic levels, the demand is still very high. In Toronto and the GTA, detached homes and condos are leading the pack in terms of desirability. The average price for a detached home across the GTA is $1,432,951, which is up 7.8% since last year (although down 6.1% is April). As people are coming back to the office and to downtown core in general, condos are becoming a hot commodity again with the average prices for condo apartments rising to $793,124 – a 10% increase year over year, but 3.4% decrease since April.
The Takeaway for Sellers and Buyers in the Current Market
This year we can expect a slower but more fair market, compared to 2021. For sellers, working with an agent that puts particular emphasis on marketing is of highest importance. Price strategy will be of utmost importance and it needs to be carried out carefully, backed up with an ample of market research. It also means that the sellers will need to prepare to negotiate with buyers who will be looking out for lower prices than before and more inventory.
There will be more buyers entering the market this year, since the buying conditions will favorite them more than it is usually the case. There will also be a much higher likelihood that they will be able to purchase properties with conditional offers – something that wasn’t the case for the past 2 years.
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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.