The Greater Toronto Area (GTA) housing market continued to improve from a sales perspective in May 2023. Unfortunately, the supply of homes for sale did not keep up with the demand for ownership housing. Sales as a share of new listings were up dramatically compared to a year ago. This is a clear signal that competition between buyers increased substantially compared to last year, resulting in the average selling price reaching almost $1.2 million last month.
“Despite the fact that we have seen positive policy direction over the last couple of years, governments have been failing on the housing supply front for some time. Recent polling from Ipsos found that City of Toronto residents gave Council a failing grade on housing affordability and pointed to lack of supply as the major issue. This issue is not unique to Toronto. It persists throughout the Greater Golden Horseshoe. If we don’t quickly see housing supply catch up to population growth, the economic development of our region will be hampered as people and businesses look elsewhere to live and invest,” said Toronto Regional Real Estate Board (TRREB) President Paul Baron.
GTA REALTORS® reported 9,012 sales through TRREB’s MLS® System in May 2023 – a 24.7 percent increase compared to May 2022. Conversely, new listings were down by 18.7 percent over the same period.
On a month-over-month seasonally adjusted basis, sales were up by 5.2 percent compared to April 2023. “The demand for ownership housing has picked up markedly in recent months. Many homebuyers have recalibrated their housing needs in the face of higher borrowing costs and are moving back into the market.
In addition, strong rent growth and record population growth on the back of immigration has also supported increased home sales. The supply of listings hasn’t kept up with sales, so we have seen upward pressure on selling prices during the spring,” said TRREB Chief Market Analyst Jason Mercer.
The MLS® Home Price Index (HPI) composite benchmark was down by 6.9 percent year-over-year in May 2023, but up by 3.2 percent on a seasonally adjusted monthly basis compared to April 2023. The average selling price, at $1,196,101, represented a small 1.2 percent decline relative to May 2022. On a seasonally adjusted monthly basis, the average selling price was up by 3.5 percent compared to April 2023.
CONDO MARKET UPDATE
In line with the general market trends, condominium apartment sales and the average selling price were lower in the first quarter of 2023 compared to the same period in 2022. However, strong population growth, tight rental market conditions, and improved first-time buying intentions will result in renewed growth in condo sales moving forward.
There were 4,519 condominium apartment sales reported through TRREB’s MLS® System in Q1 2023 – down by 42.9 percent compared to 7,909 sales reported in Q1 2022. Over the same period, new listings were also down, but by a lesser annual rate of 19.9 percent. This means that condo buyers did experience more choice compared to the first three months of 2022.
“Higher borrowing costs caused a temporary lull in condo buying activity. However, recent Ipsos polling for TRREB suggests that first-time buying activity will pick up noticeably this year due, at least in part, to double-digit rent increases over the past two years. Despite increased interest rates, mortgage payments on a condo are now closer to the cost of renting for a lot of potential buyers. In addition, homeownership has the added benefits of equity growth and asset appreciation over the long term,” said TRREB President Paul Baron.
The average price for condominium apartments sold in Q1 2023 was $700,566 – down 11.4 percent compared to the average of $790,418 in Q1 2022. Approximately two-thirds of GTA condo sales took place in the City of Toronto. The average selling price in Toronto was $726,664 in Q1 2023 – down by 10.3 percent compared to the same period a year earlier.
“Housing market conditions have been tightening up in the GTA. Home sales and selling prices are expected to improve as we move through 2023. Based on the expectation that first-time buying activity will increase this year, look for the condominium apartment segment to be one of the recovery leaders in terms of sales and price growth,” said TRREB Chief Market Analyst Jason Mercer.