The latest numbers from the Toronto Regional Real Estate Board (TRREB) show a glimmer of hope for buyers who are facing fatigue in an extremely competitive marketplace: while inventory is still down by historical measures, key leading indicators are demonstrating that February was a little better for buyers than recent months.
Overall, new listings have dropped year over year, but not as much as sales, pointing towards a small move towards a slightly more balanced market – a trend many real estate experts anticipate to continue into the next few months. There were 14,147 new listings in February, contrasting to 9,097 sales, leading to an SNLR of 64%. This ratio is the best we’ve seen for buyers in many months.
“The last few months have been tough for buyers, but in the last few weeks of February, we started to see more inventory come onto the market. Things are still at historic lows, but we’re seeing a slight improvement. This is extremely hopeful news heading into the spring market, where I anticipate we’ll see even more inventory come online in the Toronto Region,” explains Zoocasa REALTOR, Emma Pace.
“Many buyers are understandably feeling fatigued right now after months of competing in a really difficult marketplace. But with new inventory on the way, and the latest Bank of Canada rate increase influencing some buyers to put their purchase on pause, we’re coming up to what I believe is the first real opportunity for buyers in 2022.”
Second-Hottest February on Record
Sales are down from the all-time record set last year, but overall, still represented the second-best February in recent history. Overall, there were 9,097 total transactions last month, with most product types seeing an increase of sales by over 50% from January.
Overall, this matches what analysts have been predicting for 2022: Historically strong performance in the housing market, but slower than what we saw last year. Rising interest rates, and a return to a more normalized real estate market after the COVID-19 pandemic, are just two of the major factors contributing to lower sales volumes this year than last.
In the TRREB area overall, condo townhomes are seeing the smallest decrease in sales volumes, down only 8% from this time last year.
Home Prices Are Still Feeling Upwards Pressure
While market conditions are making the move to becoming more balanced, they certainly aren’t there yet. The Toronto Region is still in a firm seller’s market, with an SNLR of 64%. However, this is considerably more balanced than the rate of 117% we saw just a few months ago in December, where more properties sold than came to the market.
The average price of a home across the Toronto Region has risen 27.7% year over year, to a new record of $1,334,544. A significant portion of these gains occurred in the last two months, where record-breaking low levels of inventory brought buyer competition to extreme levels. Since December 2021, the average price has grown by 15%, gaining over $150,000 in value in just two months.
However, given that many official bodies have projected price growth in the region to moderate in 2022, it’s not likely we continue to see price growth continue at this breakneck pace.
TRREB’s Chief Market Analyst Jason Mercer explains, “We have seen a slight balancing in the market so far this year, with sales dipping more than new listings. However, because inventory remains exceptionally low, it will take some time for the pace of price growth to slow. Look for a more moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold temporarily as they resituate themselves in the market.”
What Does This Mean for Buyers?
According to Pace, “If you’ve been in multiple bidding wars earlier this year and haven’t found something yet, it may feel tempting right now to take a break from your search to regroup. But, remember the best opportunities are available when your competition is distracted. Persistence pays off in a seller’s market, and I’m advising all my clients to stay sharp to take advantage of the new opportunities coming this spring.”
If you haven’t yet begun your home search, but are considering making a move this spring, a great way to start would be with a free buyer’s consultation. Here, an agent will walk you through the home buying process, as well as providing you with some ideas to find the right property for you given what you’re looking for and your budget.