Following last year’s strong summer market, sales are down 41% year-over-year in June, but the average selling price for homes in Toronto and the Greater Toronto Area (GTA) remains 5.3% above the June 2021 price, at $1,146,254, and down 14% compared to the all-time high in February of this year of $1,334,544, according to the most recent stats from the Toronto Regional Real Estate Board (TRREB). The MLS® Home Price Index Composite benchmark reflects this selling price as it was up by 17.9 per cent year-over-year, only slightly down from May. As the average selling price continues to trend lower on a monthly basis, buyers are making deals in more affordable areas, with high demand for townhouses and condominium type homes, in particular.
The number of transactions was down compared to May, but this is a common trend this time of year, whereas the number of new listings remains in line with May, providing more balance in the market and steadying the rate of price growth. In June, there were 1.1 months of inventory in the TRREB region providing more options for buyers than ever before in 2022.
Rising Interest Rates and the Psychological Impact on Home Sales
Many buyers that can afford the higher borrowing costs are choosing to wait to see how prices change. However, in some areas home prices are going down and buyers may be pleasantly surprised to learn that the growing interest rates may not affect their monthly payments as much as they expected.
- Read: Sale Prices are Dipping but Interest Rates are Rising: Read About the Impact to Monthly Mortgage Payments (REPORT)
“Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein home buyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up. Expect current market conditions to remain in place during the slower summer months. Once home prices stabilize, some buyers will re-enter the market despite higher borrowing costs,” said TRREB President Kevin Crigger.
Housing Demand Will Remain Strong Long-Term
Prospective buyers and sellers are encouraged not to try to time the market. As Canadians adjust to the new borrowing costs, we expect to see the market begin to level-out and return to more normal levels. “Ontarians still need to move – whether it is for work, school, because of life changes, there is still a pent up demand. With rents at an all time high and only increasing month-over-month, putting those rental payments towards a home of their own will become much more palatable for some as prices start to stabilize at lower values” says Lauren Haw CEO of Zoocasa. Talk to your real estate agent and mortgage broker to understand what you can afford in which markets if you’re planning to buy. Sellers are encouraged to get a home appraisal to understand what their home is worth now and work with a real estate agent to properly price their home based on the market and demand.
“Our region continues to grow because we attract people and businesses from all around the world. All of these people will require a place to live, whether they choose to buy or rent. Despite the shorter-term impact of higher borrowing costs, housing demand will remain strong over the long-term, as long as we can produce homes within which people can live. Policy makers at all levels need to make this their key goal,” said TRREB CEO John DiMichele.
Cities with Below Average Prices
Toronto and the GTA continue to grow in population and there are many cities and regions with prices below the average, leading to a high demand and higher volume of sales. When comparing the sales-to-new-listings ratio (SNLR), we examined some of the more in-demand areas and whether they are favouring sellers or buyers at this time; an SNLR of greater than 60% favours sellers and below 40% favours buyers, as a general rule.
Demand in Oshawa remains high as it’s a comparatively affordable city within 60kms to Toronto. With an average price of $814,635, it is 29% lower than the Toronto and GTA average. In the month of June, there were 548 new listings and 288 sales, for a sales-to-new-listings ratio (SNLR) of 67.1%. This indicates that Oshawa is close to a balanced market, but currently still favouring sellers.
Cities in Durham region continue to lead the pack with more affordable sales prices month-over-month, and Brock is another great example of that. The average price in June was $729,059, 36% below the Toronto and GTA average. It saw 43 new listings come to market, and 17 of them sold, for a SNLR of 60.2%, signaling a balanced market.
With an average price of $900,221, homes in the Orangeville market are priced 21.4% below the Toronto and GTA average. There were 41 sales and 93 new listings, making the SNLR in the city 67.5%, meaning that the Orangeville market is still favouring sellers.