GTA REALTORS® Release April 2023 Stats
May 3, 2023 – The Greater Toronto Area (GTA) housing market continued to tighten in April 2023. On a year-over-year basis, sales edged lower compared to April 2022, but new listings were down by more than one-third. Fewer listings relative to sales meant there was more competition between buyers, supporting an improvement in selling prices since the beginning of this year.
“In line with TRREB’s outlook and recent consumer polling results, we are seeing a gradual improvement in sales and average selling price. Many buyers have come to terms with higher borrowing costs and are taking advantage of lower selling prices compared to this time last year. The issue moving forward will not be the demand for ownership housing, but rather the ability to meet this demand with adequate supply. This is a policy issue that requires sustained effort from all levels of government,”
said TRREB President Paul Baron.
GTA REALTORS® reported 7,531 sales through TRREB’s MLS® System in April 2023 – down by 5.2 per cent compared to April 2022. In comparison to March 2023, sales increased on an actual and seasonally adjusted basis. On a year-over-year basis, new listings were down by 38.3 per cent in April 2023.
The MLS® Home Price Index (HPI) Composite Benchmark was down by 12.1 per cent year-over-year in April 2023. Compared to March, the benchmark price was up on an actual and seasonally adjusted basis. The average selling price in the GTA was $1,153,269 in April 2023 – down 7.8 per cent compared to $1,250,704 in April 2022. The average selling price also increased compared to March, both on an actual and seasonally adjusted basis.
“As demand for ownership housing has picked up relative to supply, we are seeing renewed upward pressure on home prices. For a short period of time, higher borrowing costs trumped the impact of the constrained housing supply in the GTA. Renewed competition between buyers is once again shining the spotlight on the persistent lack of listings and resulting impact on affordability,”
said TRREB Chief Market Analyst Jason Mercer.
“Lack of affordability in the GTA ownership and rental housing markets has been well-documented. On top of this, households faced with steep price increases for basic goods and services have had to make tough decisions to adapt. It is time for governments to make tough choices as well. On average, every dollar a household makes in the first half of the year goes to taxes. Governments need to provide more value for every tax dollar they collect and should be looking for ways to reduce tax burdens moving forward,”
said TRREB CEO John DiMichele.
This is the monthly indication of the average sales prices of single family homes (all property types) in the GTA:
$932,297 January 1st
$966,001 January 31st
$1,157,837 January 1st
$1,242,407 January 31st
$1,334,021 February (all time peak)
$1,298,666 March down
$1,250,704 April down
$1,210,509 May down
$1,145,372 June down
$1,073,316 July down
$1,078,999 August up
$1,086,456 September up
$1,087,620 October up
$1,079,693 November down
$1,050,615 December down
$1,050,615 January 1st
$1,037,542 January 31st down
$1,096,405 February up
$1,108,499 March up
$1,153,269 April up
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.
The overall market peak took place at the end of February 2022. Then, we had a series of significant increases in the Bank of Canada rate.
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.
You will notice that there was a considerable price decline, which is now reversing. Buyers wanted to wait until the market had bottomed out. So, they waited. In January, the Bank of Canada increased raising interest rates and also stated that the process was now complete (at least, for now).
All the governments seemed to be focused on lowering prices. There were all kinds of new taxes imposed by federal, provincial and municipal governments. None of them worked. But, raising interest rates worked magically and reduced prices by as much as 20% since February 2022. In February, March and April 2023, prices increased.
Buyers have been sitting on the sidelines until the Bank of Canada stopped raising interest rates. Obviously, it’s time to jump back in again. We are likely to see increasing prices going forward, subject of course, to the annual predictable fluctuations.
Sellers are holding back, not prepared to enter a falling market, so, we have a shortage of listings.
Nevertheless, for the first two weeks in May sales have been very active.
Bank of Canada Rates
These are the rates as of 15 May 2023:
|Date*||Target (%)||Change (%)|
|April 12, 2023||4.50||—|
|March 8, 2023||4.50||—|
|January 25, 2023||4.50||+0.25|
|December 7, 2022||4.25||+0.50|
|October 26, 2022||3.75||+0.50|
|September 7, 2022||3.25||+0.75|
|July 13, 2022||2.50||+1.00|
|June 1, 2022||1.50||+0.50|
|April 13, 2022||1.00||+0.50|
|March 2, 2022||0.50||+0.25|
|January 26, 2022||0.25||—|
|December 8, 2021||0.25||—|
*As of 2021, a change takes effect the day after its announcement.
Second Thoughts about Selling at the Peak
The market peaked at $1,334,021 in February 2022. Obviously, that was the best time to sell. Maybe and maybe not!
Closings are typically 60 to 90 days. Very short, 30 days or a little on the longer side, being 120 days. However, many February closings stretch out to close 31 July. The price at the end of July was $1,073,316, that’s a decline of $260,705 or 19.54%. Their properties appraise at $260,705 less than they need to close their deals.
For many purchasers, it simply meant that they didn’t have sufficient funds to close their deals. For the Sellers, this likely means a lawsuit to recover their losses. And, if they were using the funds to buy something else, their own purchases might have fallen through too! So, that means two lawsuits. So, a February high priced sale might be quite risky!
It’s usually best to avoid risky time periods.
The Market has Bottomed out and we are on a Rise Again
Buyers are back to bidding wars and Sellers are gradually starting to return.
Long Term Performance
It’s unfortunate, that the media hasn’t written about this yet. Over the longer term, real estate has proven to be an excellent investment. They will in time.
If you would like to discuss the market, please give me a call at 647-404-8150.
Brian Madigan LL.B., Broker