Toronto and GTA Markets in October 2022

GTA REALTORS® Release October Stats

November 3, 2022:

“Despite the continued housing market transition to a higher borrowing cost environment, the average selling price in the Greater Toronto Area (GTA) found some support near $1.1 million since the late summer. GTA home sales continued to adjust to substantially higher interest rates in October 2022, both on an annual and monthly basis. However, new listings are also down year-over-year and month-over-month. The persistent lack of inventory helps explain why the downward trend in home prices experienced in the spring has flattened over the past three months.

GTA REALTORS® reported 4,961 sales through the Toronto Regional Real Estate Board’s (TRREB) MLS® System in October 2022 – a similar number to September 2022 but down by 49.1 per cent compared to October 2021. Year over-year sales declines were similar across major market segments.

New listings were down by 11.6 per cent year-over-year and reached an October level not seen since 2010. New listings were down on an annual basis more so for mid-density and high-density home types, which helps to explain why prices have held up better in these categories compared to detached houses.

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households,”

said TRREB President Kevin Crigger.

The MLS® Home Price Index (HPI) Composite Benchmark was down by 1.3 per cent year-over-year in October 2022. The average selling price for all home types combined, at $1,089,428, was down by 5.7 per cent compared to October 2021. The monthly trends for both the MLS® HPI Composite and the average selling price have flattened in recent months following steeper declines in the spring and early summer.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,”

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

$1,242,153           January 31st

$1,334,062           February                         (all time peak)

$1,298,999           March

$1,252,368           April

$1,210,645           May

$1,146,066           June

$1,074,052           July                                (bottom)

$1,079,922           August                           (reversal)

$1,086,991          September                     

$1,089,428           October                          (continuing to increase)

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. The decline in June is actually predicable, as was the decline in July and we should ordinarily expect a further slight decline in August, before we see some upward momentum in September. But, that didn’t happen, we saw a reversal and a change to upward momentum in August, and that has continued until the end of October.

Looking at the numbers, over a 7 month period this year (February to October) we saw a decline of $244,634 or 18.34%. This is almost a quarter of a million dollars. So, current prices are quite attractive, even if there is an increased interest rate. 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 9,743 transactions in October, while this October we only have 4,961. Buyers are still nervous. 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 August. They are not there yet.

Also, 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

www.iSourceRealEstate.com

www.OntarioRealEstateSource.com

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