GTA REALTORS® Release November Stats
TORONTO, ONTARIO, December 6, 2022 –
Homeownership market activity in November continued to be influenced by the impact of higher borrowing costs on affordability. Sales were down markedly compared to the same period last year, following the trend that unfolded since the commencement of interest rate hikes in the spring. New listings were also down substantially from last year, and at a very low level historically. The fact that the supply of homes for sale has remained low, has supported average selling prices at the $1.08 to $1.09 million mark since August.
Greater Toronto Area (GTA) REALTORS® reported 4,544 sales through TRREB’s MLS® System in November 2022 – down 49 per cent compared to November 2021, but remaining at a similar level to October especially after considering the recurring seasonal downward trend in the fall. New listings, at 8,880, were down on both a year-over-year basis and month-over-month basis.
“Increased borrowing costs represent a short-term shock to the housing market. Over the medium- to long-term, the demand for ownership housing will pick up strongly. This is because a huge share of record immigration will be pointed at the GTA and the Greater Golden Horseshoe (GGH) in the coming years, and all of these people will require a place to live, with the majority looking to buy. The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth,”
said TRREB President Kevin Crigger.
“We have seen a lot of progress this year on the housing supply and related governance files such as the More Homes Built Faster Act. This is obviously good news. However, we need these new policies to turn into results over the next year. Otherwise, the current market lull will soon be behind us, population growth will be accelerating, and we will have done nothing to account for our growing housing need. The result would be enhanced unaffordability and reduced economic competitiveness,”
said TRREB CEO John DiMichele.
The MLS® Home Price Index Composite Benchmark was down by 5.5 per cent year-over-year in November 2022. The average selling price for all home types combined was down by 7.2 per cent year-over-year. Annual price declines continued to be greater for more expensive market segments, including detached and semi-detached houses. “Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the marked downward price trend experienced in the spring has come to an end. Selling prices have flatlined alongside average monthly mortgage payments since the summer,”
said TRREB Chief Market Analyst Jason Mercer.
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
$966,068 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
$1,070,201 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
$1,251,841 April
$1,210,643 May
$1,145,799 June
$1,073,242 July (bottom)
$1,079,763 August (reversal)
$1,086,696 September
$1,090,049 October
$1,079,395 November (expected slight decline)
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, and relatively speaking we have been holding in that range until the end of November.
Looking at the numbers, over a 7 month period this year (February to November) we saw a decline of $254,634 or 19.06%. This is 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 this week. In most cases, monthly mortgage expenses will account for the drop in price. This means that the Seller is paying, not the Buyer!
Sales are off significantly. In 2021, we had 8,979 transactions in November, while this November we only have 4,544. 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 11.6%. 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. 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