The last year was a turbulent time for both homebuyers and sellers in Toronto. As mortgage rates have increased, cooled and risen again, home prices have fluctuated across Canada.
While sales and prices began to dip last year, both have seen a resurgence in the last few months. According to the Toronto Regional Real Estate Board, there were 24.7% more sales last month in the city of Toronto compared to last May, while prices have crept up on a monthly basis, with a 3% increase from April to May. But are homes selling for more or less than they were last year when interest rates were lower?
To find out, Zoocasa analyzed each Toronto ward where at least 10 transactions have taken place to learn where the most money has been spent on homes. We compared the dollar volume of each Toronto neighborhood from May 2022 to May 2023 in an effort to find out. The total dollar volume represents the sum of the prices of all sold properties and can also be calculated as the number of homes sold multiplied by the average home price.
The Number of Sales and Prices are Up in Most Markets
May 2022 was in the immediate aftermath of the Bank’s first rate hike. The response at the time was a slight price decline as buyers took a step back to analyze the market after a sustained period of minimal borrowing costs. The real decline was felt in the number of sales – 11.4% fewer homes traded hands in May than in April of last year. That theme continued as the rate hikes continued to mount up. However, interest rates were held at 4.5% up until last week, and it seems like buyers have felt more confident dipping their toes into the market, and home prices and sales have begun to increase. It’s likely that the reason there has been such a spread of dollar volume increases is because of the more predictable cost of borrowing so far in 2023.
The dollar volume has decreased in just 12 Toronto neighbourhoods in the freehold market, compared to 22 where the amount of money spent has increased. However, prices play a bigger part in this than sales volume. In the W02 neighbourhood, there has only been one more sale of a freehold home in May this year compared to last year last year, yet there has been a 6.2% increase in the amount of money spent. In E09, there were 47 freehold sales in May this year compared to 54 in 2022, and there has still been a slight increase in dollar volume of around 1%. The largest increase in dollar volume came in the C13 neighbourhood, where volume increased by 199%.
Dollar Volume has Increased in 23 Condo Markets
The condo market, both townhouses and apartments, tells a similar tale. In just six neighbourhoods the amount of money spent on homes has declined compared to 23 where it has increased. This is more likely due to the increased popularity of condos in the last year as a more affordable property type, with how oppressively expensive freehold homes can be in the city coupled with the higher cost of borrowing. The greatest increase in volume came in the C12 neighbourhood, where the volume of money spent increased by a whopping 169% higher in May 2023 compared to May 2022.
Buyer psychology plays a large part in the real estate market. Even though conditions are tighter in terms of interest rates and prices, it seems previously reluctant buyers have adjusted to the reality of climbing mortgage rates and have moved off the sidelines.
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