The Greater Toronto Area (GTA) housing market experienced a boost in sales during the month of May 2023. However, the demand for homes outpaced the available supply, resulting in soaring prices.
Paul Baron, president of the Toronto Regional Real Estate Board (TRREB), said the failure of governments to address the issue of housing supply is worsening the situation. He pointed out that recent polling conducted by Ipsos revealed that residents of the City of Toronto gave city council a failing grade in terms of housing affordability, with the lack of supply being identified as the major concern.
“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,” he explained. “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.”
This problem is not exclusive to Toronto but persists throughout the Greater Golden Horseshoe region.
According to TRREB, GTA realtors reported a total of 9,012 sales through TRREB’s MLS System in May 2023, reflecting a substantial 24.7 percent increase compared to the same period in 2022. In contrast, new listings saw a decline of 18.7 percent during the same timeframe. On a month-over-month seasonally adjusted basis, sales increased by 5.2 percent compared to April 2023.
Sales as a proportion of new listings showed a significant surge compared to the previous year, indicating intense competition among buyers. The average selling price reached nearly $1.2 million last month.
“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,” said Jason Mercer, TRREB’s chief market analyst. “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.”
Examining the market trends, the MLS® Home Price Index (HPI) composite benchmark showed a year-over-year decline of 6.9 percent in May 2023. However, on a seasonally adjusted monthly basis, the HPI increased by 3.2 percent compared to April 2023. The average selling price stood at $1,196,101, indicating a slight 1.2 percent decrease relative to May 2022. On a seasonally adjusted monthly basis, the average selling price experienced a 3.5 percent increase compared to April 2023.
TRREB CEO John DiMichele expressed concerns about the rising cost of housing, primarily driven by limited supply and high borrowing costs. He urged municipalities, including the city of Toronto, to consider this issue when contemplating revenue generation options.
“The high cost of housing, brought about by short supply and high borrowing costs, is part of the broader increases in the cost of living. Municipalities, including the City of Toronto, need to be mindful of this,” he said.