The housing correction in Toronto and beyond this past year saw home prices plunging by as much as 20 per cent, supply on the decline and mortgage rates reaching levels the country hasn’t seen in over two decades. It was described as the harshest correction seen in 50 years by some experts. But now, a new report by RBC is suggesting that the housing correction might be over — sooner than anyone predicted.
“Spring 2023 increasingly looks like the turnaround point for Canada’s housing market after a year-long slump,” RBC senior economist Robert Hogue wrote in the report. Home sales have risen 11.3 per cent month-over-month in Canada, and prices have risen in back-to-back months, for the first time since 2022.
Toronto saw home resales jump 27 per cent month-over-month, and the average benchmark price in the city rose 2.4 per cent, bringing it up to $1.1 million. The average home price in Toronto is still down 7.8 per cent year-over-year according to the Toronto Regional Real Estate Board latest statistics, but with prices rising for the second time in as many months, it looks like the city is heading in a new direction — that of a seller’s market.
“Resurging demand and low inventories have put sellers back in the driver’s seat in most major markets, including Toronto,” the report notes.
Odeen Eccleston, Broker of Record at WE Realty Inc., said she’s been noticing a lot more confidence in the market over the past month. “March was still slow but April, it all started — bidding wars, multiple offers. It felt reminiscent of the high time of the pandemic,” she said. “But we’re still not at those super high numbers, thankfully.”
The average home price in Toronto reached a high of $1,334,544 in February 2022 before multiple rate hikes from the Bank of Canada put downward pressure on prices.
Eccleston said she saw clients who have been hesitant to enter the market. “But for the people who were kind of perpetually waiting for a crash, I would say the worst is over. So if you’ve been waiting and waiting, the time is probably now,” she said.
Right now, Eccleston said there’s more activity and competition around starter homes and homes in lower prices ranges just outside the city of Toronto. “There’s always a ripple effect with first-time buyer homes.”
She attributes that to a “copycat” effect, where residents will see a neighbour or two sell their house and decide it’s time to do the same. “People sort of follow the crowd,” she said.
Eccleston noted that affordability is still an issue, but the RBC report noted that, despite the significant loss of affordability in the past year, there might be other factors at play. “Perhaps soaring immigration and a boiling hot rental market are becoming the primary driving forces fueling homebuyer demand. In which case, we could see prices extending April’s gains—possibly materially,” the report notes.