Lack of affordability and uncertainty remained issues for many would-be home buyers in the Greater Toronto Area (GTA) in October 2023. As a result, sales edged lower compared to last year. However, selling prices remained higher than last year’s levels.
“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong. However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be home buyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly,” said TRREB President Paul Baron.
REALTORS® reported 4,646 GTA home sales through TRREB’s MLS® System in October 2023 – down 5.8 per cent compared to October 2022. On a month-over-month seasonally-adjusted basis, sales were also down in comparison to September.
New listings in October 2023 were up noticeably compared to the 12-year low reported in October 2022, but up more modestly compared to the 10-year average for October. New listings, on a seasonally-adjusted basis, edged slightly lower month-over-month compared to September 2023.
The October 2023 MLS® Home Price Index Composite benchmark and the average selling price were both up on year-over-year basis, by 1.4 per cent and 3.5 per cent respectively. On a seasonally adjusted basis, the MLS® HPI Composite benchmark edged lower compared to September 2023 while the average selling price remained at a similar level. Both the MLS® HPI Composite benchmark and average price remained above the cyclical lows experienced at the beginning of 2023.
“Competition between buyers remained strong enough to keep the average selling price above last year’s level in October and above the cyclical lows experienced in the first quarter of this year. The Bank of Canada also noted this resilience in its October statement. However, home prices remain well-below their record peak reached at the beginning of 2022, so lower home prices have mitigated the impact of higher borrowing costs to a certain degree,” said TRREB Chief Market Analyst Jason Mercer.
“In the current environment of extremely high borrowing costs, it is disappointing to see that there has been no relief for uninsured mortgage holders reaching the end of their current term. If these borrowers want to shop around for a more competitive rate, they are still forced to unrealistically qualify at rates approaching eight per cent. Following their most recent round of consultations, the Office of the Superintendent of Financial Institutions should have eliminated this qualification rule for those renewing their mortgages with a different institution,” said TRREB CEO John DiMichele
Condo Market Update
The condominium apartment market became much more balanced over the past year. While Q3 2023 condo apartment sales were up year-over-year, growth in listings far outstripped growth in sales. The result was the average price edging lower providing some relief in the face of higher borrowing costs.
There were 4,415 condominium apartment sales reported through TRREB’s MLS® System in Q3 2023 – up 6.2 per cent when compared to the same quarter in 2022. Over the same period, new condo apartment listings were up by a much greater 28.8 per cent.
“The condominium apartment market is an important entry point into home ownership for first-time buyers. A better-supplied market has led to more choice for these buyers, resulting in more negotiation power and lower selling prices on average. A pause in price growth has helped mitigate the impact of higher monthly mortgage payments,” said TRREB President Paul Baron.
In the third quarter of 2023, the average selling price for a condominium apartment GTA-wide was $716,145 – down slightly compared to $720,628 in Q3 2022. In the City of Toronto, which accounted for approximately two-thirds of condo apartment sales, the average selling price was $736,566 – down from $750,087 in Q3 2022.
“While condo market conditions have become more balanced over the past year-anda-half, we will likely start to see a tightening in the market in the second half of 2024. The GTA population is growing at a record pace and the consensus view is that we will start to see some relief in terms of borrowing costs beginning in 2024 and even more so in 2025,” said TRREB Chief Market Analyst Jason Mercer.
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