The Toronto Regional Real Estate Board (TRREB) today released its monthly report for February 2023, detailing a new set of findings based on data collected through the city’s Multiple Listing Service (MLS). The trends reported for the month show similar stats as the past few months as the historic slump in both GTA home sales and average home prices continues. What the report did offer, however, was a tinge of optimism as a number of indicators pointed to an uptick in home buying in the near term.
Beginning with a look at the difficult state of home sales in February, the MLS reported a total of 4,783 sales over the shortest month of the year. Comparing this figure to the total reported in February 2022 shows a sharp 47% year-on-year decrease.
Similarly, the rate of new listings entering the market is another category that is seeing sharp declines based on year-over-year measurements. While it’s important to recognize the potentially skewed nature of the dataset related to steady rate hikes, the fact remains that fewer homes are listed. The 8,367 new listings added to the MLS in February 2023 represent a 40.9% drop from the same month in 2022.
View of the Toronto skyline looking northwest from the Harbourfront Centre, image by UrbanToronto Forum contributor Justin Ziadeh
“New registrations in the GTA continued to decline year-over-year,” said Jason Mercer, chief market analyst at TRREB. Despite that fact, however, Mercer noted that purchase intent is increasing, and it will spread. “This increased demand will meet a limited supply of deals and lead to increased competition among buyers,” he said. “This will eventually lead to renewed price growth in many market segments, particularly those catering to first-time buyers who are facing increased rental costs.”
Even as purchase intent grows, the impact on prices has not delivered the expected results of value appreciation. The average home price in February 2023 was $1,095,617, down 17.9% compared to February 2022. However, the report notes that this decline is not solely related to the declining value.
“It’s been almost a year since the Bank of Canada started raising interest rates,” said TRREB President Paul Baron. “Home prices have fallen over the past year since a record high in February 2022, mitigating the impact of higher borrowing costs.” Interestingly, Baron explained how “many homebuyers have also chosen to buy a cheaper home to offset higher borrowing costs,” and quoted that “the proportion of home purchases under $1 million has increased significantly compared to this time last year.”
This suggests that home buyers are compromising on the value of the homes they buy, skewing average prices towards lower margins. Another observation to consider is that increasing competition and prices in the rental market will divert some tenants to the purchase market, leading to higher sales.
“As we move toward a June mayoral by-election in Toronto, housing will once again be at the center of the political debate,” said TRREB Chief Executive Officer John DiMichele. “New and innovative solutions, including the City of Toronto’s initiative to allow duplex, triplex and fourplex housing in all neighborhoods of the city, must come to fruition if we are to achieve adequate and diverse housing supply that will be a priority in the years to come Supporting record population growth is coming.”
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