It’s the same formula that has been percolating in the Toronto real estate market for months. There is a serious supply shortage, and a renewed interest from buyers that is resulting in competition for available homes and potentially higher prices in the months ahead. At least, that’s the verdict according to the Toronto and Region Real Estate Board, which released new market statistics this morning.
The spring housing market usually sees a big uptick in listings and activity. Apparently, that is not the case this year. Far from it. According to TRREB, sales were lower compared to April 2022, but new listings were down by 38.3 per cent in April 2023.
“In line with TRREB’s outlook and recent consumer polling results, we are seeing a gradual improvement in sales and average selling price. Many buyers have come to terms with higher borrowing costs and are taking advantage of lower selling prices compared to this time last year,” said TRREB President Paul Baron.
“The issue moving forward will not be the demand for ownership housing, but rather the ability to meet this demand with adequate supply. This is a policy issue that requires sustained effort from all levels of government,” he added.
Last month, there were 7,531 sales reported by TRREB, down 5.2 per cent compared to last April. Last month, sales actually increased year-to-year.
In terms of prices, the MLS® Home Price Index (HPI) Composite Benchmark was down by 12.1 per cent year-over-year in April 2023. Compared to March, the benchmark price was up on an actual and seasonally adjusted basis.
Toronto home sales in April came in at 7,390, ⬇️ 7% over last year
The average price in April was $1.16M, ⬇️ 8% from last year
But the real story right now is in the volume of new listing. New listings are ⬇️ 38%
April 2022: 18,119
April 2023: 11,268 🧵— John Pasalis (@JohnPasalis) May 1, 2023
The average selling price in the GTA was $1,153,269 in April 2023 – down 7.8 per cent compared to $1,250,704 in April 2022. The average selling price also increased compared to March, both on an actual and seasonally adjusted basis.
TRREB market analyst Jason Mercer explained that high borrowing costs might have curtailed housing sales for a short time, but it looks like that won’t be the case much longer.
“As demand for ownership housing has picked up relative to supply, we are seeing renewed upward pressure on home prices,” said Mercer. “For a short period of time, higher borrowing costs trumped the impact of the constrained housing supply in the GTA. Renewed competition between buyers is once again shining the spotlight on the persistent lack of listings and resulting impact on affordability.”
The new TRREB market stats come a week after the Canadian Mortgage and Housing Corporation released its own housing forecast that shows housing starts will decline or remain below 2021 and 2022 levels until 2024 or 2025. Translation: housing supply will continue to fall short of meeting the demand and will in turn put affordability pressures on Canadians.
Affordability will continue to deteriorate through 2023, in both the ownership and rental markets,” said CMHC chief economist, Bob Dugan. “With inflation coming back to the 2% target by the end of the forecast period, mortgage rates will gradually decline, supporting both housing demand and a recovery in the construction of new housing supply. However, with demand for housing still well outpacing new housing supply, affordability challenges will persist for owners and renters.
