The Toronto region real estate market is still being significantly impacted by the higher cost of borrowing, as sales plummeted nearly 50% year-over-year (y-o-y) in November. While activity typically tapers off this time of year due to colder weather and the holiday season, sales haven’t reached this level in more than ten years.
According to the Toronto Regional Real Estate Board (TRREB), new listings were also down substantially y-o-y, however, low inventory has caused average selling prices in Toronto and the Greater Toronto Area (GTA) to remain around the $1 million mark since August. The price consistency isn’t helping those on the cusp of affordability as their borrowing power has been slashed by rising interest rates. The Bank of Canada is expected to announce another rate hike on December 7, 2022.
Hesitant Sellers Lead to Already Low Inventory Dwindling Further
There were 8,880 new listings in the Toronto region in November, compared to 10,044 during the same period last year, marking a decline of 11.6% y-o-y and reaching what TRREB described as a “very low level, historically”. The majority of newly listed properties were in the City of Toronto. Of the 3,562 new listings, 1,990 were condo apartments indicating that sellers are aware of the demand for more affordable property types. The GTA is not the only area of the country experiencing seller hesitancy, Calgary reached a 17-year low in available inventory illustrating the coast-to-coast impact on housing.
Although many buyers and sellers have parked their real estate plans this year in an effort to wait out the rate hikes, TRREB President Kevin Crigger is expecting demand to grow, stating, “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”.
Low Inventory Supporting Stable Average Selling Prices
While the supply of homes for sale has remained low, it has caused some competition for buyers. Although we’re not back to the climate of bidding wars at the peak of the pandemic, buyers are experiencing some competition, causing average selling prices to remain around the $1.08 to $1.09 million mark since August. The average price for all property types was $1,079,395 in November, down just 7.2% over last year.
The average price of all property types was down in Toronto and the GTA except for detached houses in the GTA. Detached homes actually saw slight price gains of just over 3% month-over-month. Year-over-year, semi-detached properties have experienced the largest price declines, at 13.9%, while condos are down only 0.9% over November 2021, but still up 0.3% in the 905.
With experts predicting another peak in housing demand driven by our growing population, now is the time to prepare to enter the market, whether you’re buying, selling, or both. Download our free Buyer’s Guide to get you started and contact us today to speak to a real estate agent in your area.