toronto real estate

Toronto Real Estate Market Report

Toronto Real Estate Market Report – December 2022

Toronto Real Estate Market Report December 2022

 

The Greater Toronto Area housing market experienced a marked adjustment in 2022 compared to the record levels seen in 2021. Existing affordability issues brought about by a lack of housing supply were greatly exacerbated by sustained interest rate hikes by the Bank of Canada.

Following a very strong start to the year, home sales began trending lower in the spring and summer, as aggressive Bank of Canada interest rate hikes impacted affordability. Buyers were simply unable to pay higher prices in this mortgage environment, which caused home prices to adjust downward. However, home prices started levelling off in the late summer, suggesting the aggressive early market adjustment may be coming to an end. In fact, prices stayed relatively flat from August to December.

There were 75,140 total sales reported through MLS in 2022 – down 38.2% compared to the 2021 record of 121,639. Even compared to the 10-year average of roughly 95,000 sales, last year was down more than 20% from the norm. The number of new listings was 152,873 – down 8.2% from 2021. This indicates that some sellers were not content with the lower prices they were seeing and did not list their properties for sale.

While falling home sales and prices dominated the headlines in 2022, the supply of new listings continued to be an issue as well. This helps explain why selling prices have found some support in recent months. Lack of supply has also impacted the rental market. As renting has become more popular due to higher interest rates, tight rental market conditions caused double-digit rent increases.

The average selling price for 2022 was $1,189,850 – up 8.6% compared to $1,095,333 in 2021. Contrary to what most people expected, as they saw prices drop month over month. But for more than half the year, while prices fell monthly, they stayed higher than the same period in 2021. It wasn’t until late summer that we saw monthly prices below 2021.

As we look forward to 2023, there will be two opposite forces impacting the housing market. On one hand, we will continue to feel the impact of higher borrowing costs. Though 5 months of flat prices may show that buyers have become used to the new conditions. On the other hand, we’ll have continued increasing demand. The 20,000-30,000 fewer buyers from 2022 will still want a new home, and we may see many of them come out to buy this year. Couple that with proposed record levels of immigration and we’ll have serious demand for ownership and rental housing. All without any meaningful increase in supply.

December 2022 Details

* There were 3,117 sales reported through MLS in December 2022 – down 48.2% compared to December 2021.
* New listings totalled 4,074 – down 21.3% from December 2021.
* The MLS Home Price Index was down 8.9% on a year-over-year basis in December 2022.
* The December average selling price, at $1,051,216, was down by 9.2% compared to December 2021.
* The December average price was only 2% lower than July, though, showing how flat prices were in the 2nd half of the year.

 

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