GTA REALTORS® Release December Stats
TORONTO, ONTARIO, January 5, 2023
“The Greater Toronto Area (GTA) housing market experienced a marked adjustment in 2022 compared to record levels in 2021. Existing affordability issues brought about by a lack of housing supply were exacerbated by sustained interest rate hikes by the Bank of Canada.
“Following a very strong start to the year, home sales trended lower in the spring and summer of 2022, as aggressive Bank of Canada interest rate hikes further hampered housing affordability. With no relief from the Office of Superintendent of Financial Institutions (OSFI) mortgage stress test or other mortgage lending guidelines including amortization periods, home selling prices adjusted downward to mitigate the impact of higher mortgage rates. However, home prices started levelling off in the late summer, suggesting the aggressive early market adjustment may be coming to an end.”
said TRREB President Paul Baron.
There were 75,140 sales reported through TRREB’s MLS® System in 2022, down 38.2 per cent compared to the 2021 record of 121,639. The number of new listings amounted to 152,873 down 8.2 per cent compared to 166,600 new listings in 2021. Seasonally adjusted monthly data for sales and price data show a marked flattening of the sales and price trends since the late summer.
“While home sales and prices dominated the headlines in 2022, the supply of new listings continued to be an issue as well. The number of homes listed for sale in 2022 was down in comparison to 2021. This helps explain why selling prices have found some support in recent months. Lack of supply has also impacted the rental market. As renting has become more popular in this higher interest rate environment, tighter rental market conditions have translated into double-digit average rent increases.”
said TRREB Chief Market Analyst Jason Mercer
The average selling price for 2022 was $1,189,850 3 up 8.6 per cent compared to $1,095,333 in 2021. This growth was based on a strong start to the year, in terms of year-over-year price growth. The pace of growth moderated from the spring of 2022 onwards.
This is the monthly indication of the average sales prices of single family homes (all property types) in the GTA:
2021
$932,297 January 1st
$966,001 January 31st
$1,044,910 February
$1,097,319 March
$1,090,414 April
$1,108,137 May
$1,089,012 June
$1,061,653 July
$1,070,176 August
$1,135,027 September
$1,155,624 October
$1,162,564 November
$1,157,837 December
2022
$1,157,837 January 1st
$1,242,155 January 31st
$1,334,062 February (all time peak)
$1,298,671 March
$1,250,739 April
$1,210,700 May
$1,145,786 June
$1,073,318 July (bottom)
$1,079,739 August (reversal)
$1,086,505 September
$1,090,074 October
$1,079,122 November (expected slight decline)
$1,051,216 December
What usually happens each year? The market starts off in January, rises in February, gains momentum in March and April and reaches its peak for the year in May. The market declines in June, declines in July and then bottoms out in August. In September, it reverses itself and rises once again, and in October, it reaches its second peak for the year. In November, the market declines, as it does again in December, and the cycle repeats itself the following year.
For 2022, we were off to a fairly predictable start. The market got going in January, and rose again in February. The surprise was a slight dip in March. Then, we faced further declines in April and May which should have been the top of the market for the year. There was a drop in June, the market bottomed out in in July, reversed in August, rose in September, rose in October to a second peak in the year, declined in November and then declined further in December. Isn’t that exactly what is supposed to happen every year!
Looking at the numbers, over an eight month period this year (February to December) we saw a decline of $282,846 or 21.20%. That’s well over a quarter of a million dollars. So, current prices are quite attractive, even if there is an increased interest rate. We are still awaiting a half point increase in the Bank of Canada rates, possibly on 25 January 2023. In most cases, monthly mortgage expenses will account for the drop in price. This means that the Seller is paying, not the Buyer! The buyers out there have the same amount of money that they had before, however, now more money will be going to the Banks for interest on mortgages than to the sellers.
Why don’t my numbers match TRREB’s numbers?
That’s because mine are accurate and TRREB’s are guesswork!
Let’s have a quick look at what TRREB said:
“The average selling price for 2022 was $1,189,850 3 up 8.6% compared to $1,095,333 in 2021. This growth was based on a strong start to the year, in terms of year-over-year price growth. The pace of growth moderated from the spring of 2022 onwards.”
They said average selling price! What kind of nonsense is that? They take all the numbers in 2021 at the end of the month, divide them by 12 and give you that number. Who cares, what sort of a number is that? They give you the same average price for 2022 and compare those two numbers. That will provide you with nonsense. If you do that, there is an 8.6% increase. There are actually 24 months that are taken into consideration in coming up with that performance. Well, it’s good. We would all like to see 8.6% increase over the year.
However, that’s not what I do. I give you all the real numbers. You can see what they are every month. No sleight of hand here!
The price on January 1 was $1,157,837 and the year ended up a $1,051,216, for a $106,621 loss. That works out to a 9.21% decline. The math works. Just check the numbers.
Now, when we go back to TRREB, they have to start off with …” …well we go back to 2021, then start averaging them out etc…..”.
My numbers are true and accurate mathematically. How well did the market do in 2022? There was a 9.21% decline. Naturally, I stick with 2022 from start to finish!
However, I reproduce the TRREB version and explanation, because you have to know what other people are thinking! Remember, many will think that there’s been an 8.6% increase, rather than a 9.21% decline.
Sales Activity
Sales are off significantly. In 2021, we had 6,013 transactions in December, while this December we only have 3,117. The numbers are even worse over the full year. In 2021 we had 121,639 transactions. That went down to 75,140 in 2022. That’s 46,499 missing deals. With expected increases that really means that there are close to 50,000 potential buyers out there. This doesn’t mean it’s a buyers’ market. It’s still a sellers’market. We are just taking a pause.
Buyers continue to be nervous about the market. Where is the market headed? Naturally if “down” is the answer, they are going to sit and wait. Buyers have not concluded that the market bottomed out in July. They are not there yet.
Also, new listings were down by 21.3%. That simply means that Sellers are going to sit and wait rather than jump into this market. They are cautious too!
However, what we have just witnessed is a decline and a bottoming out, which should suggest that this is a good time to buy. There is one little problem and that is, that Buyers have less money to spend since interest rates went up. Some will wait for the Bank of Canada announcement this month. That also means that they should act as soon as they can in order to avoid any potential price escalation. So far, prices have dropped and Sellers have paid the price. This isn’t likely to continue indefinitely.
Overall, it is still a sellers’ market. There just isn’t enough inventory. What we are looking at right now, is simply some temporary opportunities.
It’s impossible to predict the future, but we can certainly observe the current trends in the marketplace to give us some guidance.
If you would like to discuss the market, please give me a call at 647-404-8150.
Brian Madigan LL.B., Broker