Toronto Real Estate Market Report – August 2022
Toronto Real Estate Market Report
– August 2022
There were 5,627 home sales reported through MLS in August 2022, representing a year-over-year dip of 34.2% – a lesser annual rate of decline compared to the previous four months. The August sales result also represented a month-over-month increase compared to July – the first since the beginning of the year.
Sales represented a higher share of new listings compared to the previous three months. If this trend continues, it could indicate some support for selling prices in the months ahead. Which means we may have seen the bottom of the market in July and August. How the fall market shapes up is yet to be seen.
On a year-over-year basis, the MLS Home Price Index (HPI) was up by 8.9% and the base average selling price for all home types combined was up by 0.9% to $1,079,500. This is the 8th consecutive month in 2022 with prices higher than in 2021. Much to the surprise of many, we have yet to see a single month with prices below last year’s level, even with the combined pressures of inflation and higher borrowing costs.
The average selling price was also up slightly month-over-month, also for the first time in months. Monthly growth in the average price versus a dip in the HPI Composite suggests a greater share of more expensive home types sold in August. It also indicates we may have traditional fall market, with stronger numbers than in the summer. It could also be that many buyers pulled their purchases forward in order to avoid the rate increase this week.
Higher borrowing costs have certainly impacted home purchases, while existing homeowners nearing mortgage renewal are also facing higher costs. The federal government could provide for greater flexibility for existing homeowners by removing the stress test when existing mortgages are renewed, allowing for greater competition in the mortgage market. Allowing longer amortization periods on mortgage renewals would assist current homeowners in this inflationary environment where everyday costs have risen dramatically.
There are other issues beyond borrowing costs impacting housing affordability in the GTA. Creating more supply is the longer-term challenge, though we are moving in the right direction on this front. The strong mayor proposal from the province coupled with the recent commitment from Toronto Mayor John Tory to expand ownership and rental housing options are examples of this.