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August 2023 Toronto Real Estate Market Report

There were no surprises in the residential resale data for the month of August. As forecast in last month’s Report, while the benchmark rate of the Bank of Canada remains at its lofty rate – it is currently 5.0 percent – and the average sale price for all properties sold, although declining, is still high, sales volumes will remain low. And that is what happened in August.


During the month of August, only 5,294 residential properties were reported sold. In July, 5,245 properties were reported sold. Compared to August of last year, sales declined by 5.2 percent. In August of 2022, 5,584 properties were sold. Declines in sales volume were particularly noticeable in the case of detached (minus 12 percent) and semi-detached properties (minus 14.4 percent) across the region. By comparison, condominium apartment sales volumes increased by 7.6 percent compared to last August. These numbers are clearly a reflection of the affordability barriers impacting buyers.


The average sale price of detached ($1,416,366) and semi-detached ($1,067,980) properties is almost double the average sale price of condominium apartments. In August, the average sale price of condominium apartments throughout the region was $705,572. It was slightly higher in the City of Toronto, coming in at $724,549, and $760,485 in the City’s central core, where 63 percent of all condominium apartment sales take place.


Once again, the sales of detached and semi-detached properties that took place did so at a pace and at sales- to-list ratios that are more consistent with a classic robust market, notwithstanding the low sales volumes. In the City of Toronto, all detached properties sold in 18 days and at 101 percent of their asking price. Semi-detached properties moved even faster. All sales took place in only 13 days and for 105 percent of their list price. In Toronto’seastern districts, all semi-detached properties sold in only 11 days and at 107 percent of their asking price. In isolation, these sales numbers would reflect a resale market that’s on fire.


Underlining this performance are several factors. Firstly, although supply improved in August, it is still historically low. During the month of August, 12,296 properties came to market, 16.2 percent more than the 10,578 homes that came to market for the same time last year. The increase in inventory remains historically low. Secondly, demand remains extremely high. This is due primarily to much higher population levels as a result of the tremendous increase in immigration. In August alone, Canada welcomed 100,000 new immigrants, at least half making their way to southern Ontario. Thirdly, mortgage interest rates, coupled with 2 percent stress testing, make the purchase of detached and semi-detached properties at their current price points prohibitive. Essentially, what this data is telling us is that demand is high, but few buyers can afford Toronto real estate. Those who can buy, are buying quickly, and paying above the seller’s asking price.


Condominium apartments are the only housing type that is showing rising sales volumes. In August, condominium apartment sales (1,086) increased by 6.5 percent compared to August 2022. In the 905 region condominium sales (523) increased by 10.17 percent. These are properties that buyers can afford.


Given the fact that we are unlikely to see a decline in the Bank of Canada’s benchmark rate until the middle of 2024, in fact, we may experience an increase before that time, and given the fact that household incomes are not increasing dramatically, we may be in the early stages of a market restructuring. (In 2021 the median economic family income in Toronto was $106,000. City of Toronto Census Study). A market restructuring took place in the early 1990s and there are indications that we may be about to re-experience that era.


From 1985 to the spring of 1989, average sales prices in the Toronto region increased by an eye-popping 113 percent. During this period, there were factors at play that were not dissimilar to today, particularly tremendous demand. Even though mortgage interest rates were much higher than they are today, there was an unmitigated belief that wealth could only be achieved and preserved by buying and owning real estate. As a result, there was a market frenzy, not unlike the height of the pandemic. It was this frenzy that caused prices to escalate by 113 percent in a mere 4 years.


In 1989, interest rates increased to 12.29 percent, and then to 13.04 in 1990. These increases and their negative economic impact brought Toronto’s resale market to a halt. Average sale prices began to decline and continued to do so for more than 6 years. At their peak in 1989, the average sale price for a Toronto home was $273,698. By 1996, the average sale price had slid to $195,169, a decline of 28.5 percent.


The decline in sales volumes and average sales prices came to an end in 1996 because by 1996, mortgage interest rates had fallen to 4.53 percent (Statistics Canada). The confluence between lower average sale prices and mortgage interest rates made real estate in the Toronto region once again affordable. Because ofpersistently low mortgage interest rates, it has remained affordable, until the Bank of Canada commenced its benchmark rate hikes in March of 2022. We have seen 10 rate increases since then.


If the cost of borrowing remains high, we may have to wait until the confluence of lower average sale prices and lower borrowing costs connect to drive an increase in sales volumes, as occurred in 1996. The demand is certainly there, and growing, as Canada’s latest immigration numbers attest. In future reports, we will monitor this data to determine if we are indeed into a similar market restructuring as occurred more than 30 years ago.



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July 2023 Toronto Real Estate Market Report

On a year-over-year basis, July’s residential resale market results were quite favourable. The 5,250 sales reported were almost 8 percent higher than the 4,870 properties reported sold last July. The average sale price for all properties sold came in at $1,118,374, a 4.2 percent improvement compared to the average sale price of $1,073,213 achieved in July last year. Even days-on-market improved by 10.5 percent, from 19 to 17 days this July.


However, by July 2022, the Bank of Canada had implemented 4 increases taking the benchmark rate from 0.25 percent to 2.50 in only four months. Although more rate hikes were on their way, by July of last year the resale landscape had changed dramatically and negatively. Sales were grinding to a halt and the average sale price was plummeting. In February of 2022, the average sale price was $1,334,000, and by July the average price had declined to $1,073,000. The decline in sales was even more dramatic in March 2022, where 10,861 homes were reported sold, and by July that number had declined to 4,870, a shocking 55 percent.


The real story is what has happened to the resale market since May of this year when, in its wisdom, the Bank of Canada once again decided to increase its benchmark rate. Having increased its rate 8 times since March of 2022, it raised its rate both in June (0.25 percent) and in July (another 0.25 percent), bringing the benchmark rate to 5 percent - the highest it has been in more than 20 years. As sales and average sale prices declined through the second half of 2022, sales and average sale prices have declined since the Bank of Canada has begun to increase rates once again in June and July of 2023, an unsettling similarity to what happened in 2022.




The decline in reported sales since May is 42 percent, with a decline of 30 percent when July sales are compared to those of June of this year. These results unequivocally indicate how powerful the impact of Federal monetary policy is on the real estate market. Interestingly, the decline in average sale prices, which has also taken place, is not nearly as dramatic as the decline in sales. Compared to a 42 percent decline in sales, the 3 percent decline in average sale prices is negligible.


Ironically, the decline in reported sales and average sale prices is not an indication of a weak market. Rather, it reflects affordability, or stated more accurately, the lack of affordability. Each rate hike that the Bank of Canada implements makes it that much harder for buyers and in many instances removes them from the market. Those buyers that have the financial ability are still engaged and continue to drive the market in ways that appear to be incongruous with sales and average sale price numbers.


In July, all 5,250 properties reported sold were contracted after only 17 days on market (on average), while all properties sold for 102 percent of their asking price. In the City of Toronto, properties sold for 103 percent of their asking price. Detached properties in the City of Toronto, which had an average sale price of $1,641,000, sold at 102 percent of their asking price, whereas semi- detached properties ($1,257,000) sold for 108 percent of their asking price. In Toronto’s eastern districts, semi- detached properties sold for an eye-popping 113 percent of their asking price and in only 11 days. These numbers reflect a market that is extremely robust. Unfortunately, because of a lack of affordability generated by the Bank of Canada, some buyers simply can’t participate in it.


If these conditions persist – that is if the Bank of Canada continues to implement further increases to its benchmark rate – there is likely to be further compression of average sale prices. To date, the market has seen no forced or panic selling by homeowners. If high rates persist deep into 2024, more properties will come to market as homeowners are forced to deal with the prevailing high mortgage interest rates on the renewal of their mortgage. There is some, though scant, evidence that this may have happened in July where 13,412 new properties came to market, 11.5 percent higher than the 12,294 that came to market in July of 2022. At the beginning of August, there were 15,371 homes available to buyers, slightly more than the 15,329 available last year. The significance of this 0.3 percent increase is that it is the first positive variance, year-over-year, that we have seen since the beginning of the pandemic.


As we move into August and the second half of 2023, current market conditions will persist unless the Bank of Canada weighs in and either increases or decreases its benchmark rate. Considering that Canada’s Consumer Price Index was only 2.8 percent in June, following a 3.4 percent increase in May, and with the economy showing signs of weakness, it is unlikely (we hope) that the Bank will implement any new increases. That means that those buyers that have the financial ability to engage in this market will continue to do so but in fewer numbers. If more properties come to market, we will see increased pressure on average prices, as buyers have, for the first time in years, more choice.



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June 2023 Toronto Real Estate Market Report

June was the first month since January when both sales and average sale prices declined, as compared to the month before. June saw 7,481 reported residential resales as compared to almost 9,000 sales in May. The average sales price dropped moderately from $1,195,929 for the Greater Toronto Area as compared to the price of $1,182,120 in May.



Notwithstanding these declines, the market remains exceptionally strong, with demand continuing to outstrip supply. The decline can be attributed to a number of factors. These include a return to the historical seasonal declines in June (distorted during the pandemic), and the lack of supply. In June, only 15,865 new properties came to market. This was three percent fewer than the 16,353 that came to market last year. At the end of the month, there were only 14,107 homes available to buyers (more than 12 percent fewer than last year). Given the incredible growth in the Greater Toronto’s population, at least 20,000 properties should be available to buyers to even begin to reflect a balanced marketplace, if not many more.


Affordability is the main issue impacting the resale market. In June, after a five-month pause, the Bank of Canada raised its overnight rate to 4.75 percent, the highest it has been since 2001. Unfortunately, the Bank has given every indication that it will once again increase its benchmark rate in July. The consensus amongst Canadian economists is that the rate will go to five percent. This will have a further dampening effect on the resale market, as most buyers are already struggling with affordability. As it is, buyers in the Greater Toronto Area need a 20 percent down payment ($236,424) and a household income of more than $250,000 to buy the average-priced property in the Greater Toronto Area.


Even with these staggering high costs of housing, the Toronto and region resale market remains surprisingly resilient. In June, all properties reported sold were on the market for only 14 days. Last year properties were on the market for 15 days. Not only did they sell quickly, but they all sold for an eye-popping 104 percent of their asking price. These numbers include all condominium apartment sales. Sales of detached and semi-detached properties in the City of Toronto sold even faster, in 11 and 10 days, respectively. All semi-detached properties in the City of 

Toronto’s eastern districts sold in a mere 7 days for an astounding 118 percent of their asking price. These are incredible numbers given the high cost of detached and semi-detached properties in the City of Toronto and in the 905 region.




There are still a few communities in the 905 where the average sale price is under $1 Million but they are becoming a rarity and generally located in the outer sectors of the region.


The strength in the resale market is due to a combination of population growth and the lack of supply. In June alone, Canada’s population increased by 84,000 due to immigration. Almost half of those immigrants will relocate to southern Ontario. Last year 227,235 immigrants arrived in Ontario. British Columbia, the next highest destination for new immigrants, saw only 83,200 relocating to the Province (Source: © Statista 2023).


If the Bank of Canada increases the benchmark rate as is expected in July, sales will continue to decline throughout the region, although, given the demand, average sale prices will only moderately decline. For the time being, there are no forced sales due to financing problems, and hopefully, the benchmark rate will begin to decline before that becomes a problem that the resale market will have to face. It is anticipated that the benchmark rate will begin to decline in 2024, although any declines will be moderate. The day of two-percent mortgage interest rates that propelled the resale market through the pandemic will become a distant, and no doubt longed for, memory.


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May 2023 Toronto Market Report

It is hard to believe that in a span of fifteen months the Toronto and region real estate resale market has gone from record breaking sales and house prices to a precipitous decline, not seen in decades, to a market resurrection in May. Although May did not match the dizzying highs of February and March of 2022, resale results were nothing short of impressive.


May marked the forth consecutive month of rising sales. What was particularly impressive was the increase in the number of reported sales compared to April. The market reported 9,012 sales in May, a 20 percent increase compared the 7,531 achieved in April, and a 25 percent increase compared to the 7,226 reported sales in May 2022. Whether this accelerated pace can continue into June will depend on a number of factors that will unfold during the course of the months to come.



Clearly the demand for ownership in the greater Toronto region remains strong. Satisfying it continues to be a problem. Government at all levels have simply failed to provide the necessary housing that the region’s high levels of immigration have necessitated. What new housing that has been provided has become even more expensive due to excessive regulatory barriers. A recent C.D. Howe study estimates that in Toronto new homes are $350,000 more expensive due to the regulatory burdens that are choking the housing supply.


It is no surprise that for the forth connectivity month the average sale price for all properties sold in the Toronto region once again increased, which includes condominium apartments which formed almost 30 percent of the 9,012 reported sales.



The average sale price of condominium apartments was only $748,483 across the region. Detached properties came in at $1,556,566 (but $1,913,132 in the City of Toronto) and the average sale price of semi-detached properties was $1,198,185 (and $1,398,821 in the City of Toronto). What these numbers demonstrate is that the exodus to regions outside the City of Toronto that took place during the pandemic appears to have reversed. During the pandemic demand in the 905 region caused average sale prices in the region to rival Toronto prices. Since January prices throughout the combined City of Toronto-416 region have increased by more than 15 percent.


Demand and supply are having a major impact on average sale prices. In May 15,194 new properties came to market. This was almost 20 percent fewer properties than came to market last May (18,687). As a result of the fewer properties coming to market and the high number of sales that were achieved in May, beginning in June there were merely 11,868 properties available to buyers, substantially lower than the 10 year average for available listings for the month of May.


Given the shortage of available properties on the market it is not surprising that months of inventory for the region has dropped to 2.2 months and that all sales (on average) took place at 105 percent of their asking price. And these sales took place in only 14 days! Even though the average sale price of detached properties came in at almost $2,000,000 in the City of Toronto, all sales took place in 13 days and at 105 percent of their asking price. Semi- detached properties, which had an average sale price of almost $1,400,000, all sold in a mere 11 days and at 111 percent of their asking price. Semi-detached properties in Toronto’s eastern districts all sold in an eye-popping 7 days and at an astounding 118 percent of their asking price. These are truly incredible market statistics and speak to a market very reminiscent to that at the height of the pandemic market, a phenomenon that only a few months ago we thought would be a historical phenomenon never to be repeated.


The supply issue is of particular concern in Toronto’s detached and semi-detached property sectors. At the end of May there were 1,286 active detached listings in Toronto. In May 970 detached properties were reported sold. At the end of May there were only 261 active semi-detached listings in the City of


Toronto, fewer than the 285 that sold in May. These numbers point to a crisis in supply.


Early June results are indicating that the resale market may be plateauing. This is due to three factors. The lack of supply, particularly in the detached and semi-detached housing sector, the average sale price hovering at $1,200,000, and high mortgage interest rates coupled with the added stress test, combined are making buying a home in the City of Toronto and the surrounding region prohibitive. The threat of a potential benchmark rate hike by the Bank of Canada is also causing apprehension amongst buyers. June’s results will be telling as to the direction of the residential resale market for the second half of 2023.


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April 2023 Toronto Real Estate Report

As forecast in March’s Market Report, April’s residential resale market continued its upward trajectory for the third month in a row. Sales volumes increased by more than 9 percent compared to March and the average sale price, which also bounced for the third month in a row since January, increased by more than 3 percent compared to March.



This trajectory is unlikely to change in May. It would have been even steeper if not constrained by affordability and the alarming decline in supply.


Although April’s 7,531 residential sales were 5.2 percent less than the 7,940 sales achieved last year, they reflect growing buyer confidence and acceptance that the exceptionally low financing costs enjoyed during the pandemic are a thing of the past. Demand has not abated, pushed to extraordinarily high levels by growth in population in the greater Toronto region, driven years of high levels of immigration. Between the years 2018 and 2022, more than 600,000 immigrants have moved into southern Ontario. New housing supply has not kept pace with this growth in population.


As a result of the eye-popping demand, average sale prices continue to rise in April, even in the face of high mortgage financing costs and borrower stress testing which adds 2 percent to the interest rate at which borrowers are attempting to qualify. April’s average sale price of $1,153,269 was only 7.8 percent lower than the average sale price achieved in April 2022. When interest rates begin to decline, which is expected in 2024, we could see average sale prices increasing to the stratospheric heights achieved during the pandemic. Six months ago this possibility was inconceivable.



The number of new properties coming to market became even more troubling during April. In April only 11,364 new listings became available to the many buyers waiting to buy. This is a 38 percent decline compared to the 18,416 properties that came to market last April. More troubling is the available supply as April came to an end. At the end of April, there were only 10,373 active listings, more than 20 percent less than the 13,092 properties available to buyers at the end of April last year. April marked the first month since March of last year when active listings were fewer than the corresponding month the year before.


Given the demand and the lack of supply in the greater Toronto area, it is not surprising that all available properties (on average) sold in only 17 days. The speed at which properties sold in April is quickly approaching the speed with which properties in the greater Toronto area sold during the height of the pandemic market – 8 days! All properties in the City of Toronto sold in only 18 days (slightly slower due to the preponderance of condominium apartment sales) but incredibly for 103 percent of their asking prices. In Toronto’s eastern districts all properties, condominium apartments, detached and semi-detached properties sold in only 11 days and for an eye-popping 109 percent of their asking prices. Semi-detached properties in the eastern districts sold in only 8 days at 115 percent of their asking prices. The average sale price of semi-detached properties in Toronto’s eastern districts was $1,223,687. Across all of Toronto the average sale price for semi-detached was $1,326,462. Detached properties came in at $1,787,752

Shockingly there were seven eastern districts that reported less than five semi-detached property sales – simply because there was no supply!


Fast sales and sale prices exceeding asking prices were not restricted to the City of Toronto. All property sales in Halton, York, and Durham region sold well above their asking prices, 101, 105, and 107 percent above asking, respectively, with all properties selling (on average) after only 15 days on the market.


The Toronto and region residential resale market is quickly moving towards crisis levels. Governments now have no one to blame but themselves, and hopefully are beginning to accept that the housing crisis can not be improved by restrictive legislation. At the federal level, there is a prohibition on foreign buyers purchasing residential properties in Canada. At the provincial level, there is a 25 percent (of the purchase price) tax on foreign buyers. At the municipal level (City of Toronto) there is a 1 percent vacancy tax. None of these legislative actions have addressed Toronto and the region’s housing issues. Toronto’s resale market is driven by domestic demand, as numerous studies have demonstrated. Population growth, which is expected to continue, requires appropriate levels of new housing, which have not been forthcoming. It is safe to forecast that the residential resale conditions that have clearly manifested themselves in April will continue and intensify as we move towards the second half of 2023.



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March 2023 Toronto Real Estate Report

As forecast March’s residential resale market continued its upward trajectory, constrained only by available supply and the lack of affordability driven by the high cost of mortgage financing and the requirement to stress-test borrowers. Stress testing means that buyers must qualify at 2 percent higher than the interest rate of the mortgage they are seeking. In March the five-year fixed-term mortgage interest rate was slightly below 5 percent. Buyers, therefore, must qualify at approximately 7 percent.


Notwithstanding these constraints, 6,896 properties were reported sold. March saw the second consecutive monthly increase in sales from the lows of December and January.

February’s 4,765 reported sales represented a 54 percent increase compared to January’s 3,089 sales, while March’s 6,896 sales saw a 45 percent jump in sales compared to February. If the market continues at its current pace April’s sales may come in at close to 8,000 which will exceed the 7,226 reported sales in May 2022, the last month that saw more than 7,000 sales.

Like reported sales, average sale prices also continue to rise.

February’s average sale price was almost 6 percent higher than the average sale price for all properties sold in January, while March’s average sale price at $1,108,606 was 1 percent higher than the price achieved in February. March’s average sale price was the highest achieved since June of 2022. Until the Bank of Canada begins to reduce its benchmark rate, currently at 4.5 percent, average sale prices will increase very moderately. Buyers’ ability to pay higher prices will be constrained by the prevailing punishing mortgage interest rates and the stress testing imposed by the Office of Superintendent of Financial Institutions.


The Bank of Canada is not expected to reduce its benchmark rate until late 2023. If inflation persists the benchmark rate will only start to be lowered in 2024. Collectively most economists affiliated with Canada’s big banks are of the view that even by the end of 2024 the benchmark rate will at best be at 3 percent. By then the “cheap” money available during the pandemic will be a distant memory.


High financing costs and supply are the key factors influencing the residential resale market. In March only 11,184 new properties came to market, far too few to meet demand. Last year 20,061 came to market in March, a year-over-year decline of almost 45 percent. On the back of immigration population growth in Toronto and the surrounding region continues at a record pace increasing the growth of demand against a dwindling level of supply.


This tension, between supply and demand, is nowhere more evident than in March’s resale data. Throughout the greater Toronto region all properties sold (on average) in only 19 days. Not only did they sell quickly, but they sold for 101 percent of their asking price. The first time this has happened since May of 2022. Reported sales in Toronto’s eastern trading areas were even faster: all properties sold in only 15 days and at 107 percent of their asking price. Semi-detached properties in the same trading areas sold in a shocking 12 days and at 113 percent of their asking price. These statistics are comparable to market movement during the height of the pandemic. Those economists that predicted a market bubble and crash are going to be sorely disappointed.


These numbers also speak to increasing levels of competition amongst buyers. Multiple offers are once again becoming the norm, particularly in desirable neighbourhoods. There are simply too many buyers for too few available properties. For example: in the City of Toronto there were only 215 available semi-detached properties for sale at the end of March. In March 202 semi- detached properties were reported sold. Effectively all semi-detached properties that came to market in March sold in the same month. Most semi-detached properties that sold did so in competition. All detached properties sold in only 16 days at 102 percent of their asking price, at an average sale price of $1,708,373.


The only real supply in the City of Toronto is in the condominium sector. At the end of March there were 4,292 properties in total available for sale in the City of Toronto (and 10,120 throughout the greater Toronto area). More than 62 percent of all listings in the City of Toronto (2,675) are condominium apartments. In March 1,410 condominium apartments were sold in the City of Toronto, with another 711 condominium apartment sales in the 905 region. Although condominium apartment sales were not as robust as ground-level property sales, they did sell for 100 percent of their asking price and in 22 days, 3 days longer than the overall average of 19 days on market. The average sale price of all condominium apartments came in at $732,944, and $786,694 for sales in Toronto’s central core, where most condominium apartments are located.


Looking toward April we anticipate further increases in the number of properties reported sold, perhaps as high as 8,000, and average sale prices rising, but moderately, constrained by the high cost of mortgage financing. Barring any unforeseen economic changes this should be the resale market’s pattern for the remainder of 2023. The Toronto and region resale marketplace can be summed up as follows – high levels of demand constrained by low levels of supply and affordability.


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April 2023 Toronto Real Estate Report

As forecast in March’s Market Report, April’s residential resale market continued its upward trajectory for the third month in a row. Sales volumes increased by more than 9 percent compared to March and the average sale price, which also bounced for the third month in a row since January, increased by more than 3 percent compared to March.

This trajectory is unlikely to change in May. It would have been even steeper if not constrained by affordability and the alarming decline in supply.


Although April’s 7,531 residential sales were 5.2 percent less than the 7,940 sales achieved last year, they reflect growing buyer confidence and acceptance that the exceptionally low financing costs enjoyed during the pandemic are a thing of the past. Demand has not abated, pushed to extraordinarily high levels by growth in population in the greater Toronto region, driven years of high levels of immigration. Between the years 2018 and 2022, more than 600,000 immigrants have moved into southern Ontario. New housing supply has not kept pace with this growth in population.


As a result of the eye-popping demand, average sale prices continue to rise in April, even in the face of high mortgage financing costs and borrower stress testing which adds 2 percent to the interest rate at which borrowers are attempting to qualify. April’s average sale price of $1,153,269 was only 7.8 percent lower than the average sale price achieved in April 2022. When interest rates begin to decline, which is expected in 2024, we could see average sale prices increasing to the stratospheric heights achieved during the pandemic. Six months ago this possibility was inconceivable.

The number of new properties coming to market became even more troubling during April. In April only 11,364 new listings became available to the many buyers waiting to buy. This is a 38 percent decline compared to the 18,416 properties that came to market last April. More troubling is the available supply as April came to an end. At the end of April, there were only 10,373 active listings, more than 20 percent less than the 13,092 properties available to buyers at the end of April last year. April marked the first month since March of last year when active listings were fewer than the corresponding month the year before.


Given the demand and the lack of supply in the greater Toronto area, it is not surprising that all available properties (on average) sold in only 17 days. The speed at which properties sold in April is quickly approaching the speed with which properties in the greater Toronto area sold during the height of the pandemic market – 8 days! All properties in the City of Toronto sold in only 18 days (slightly slower due to the preponderance of condominium apartment sales) but incredibly for 103 percent of their asking prices. In Toronto’s eastern districts all properties, condominium apartments, detached and semi-detached properties sold in only 11 days and for an eye-popping 109 percent of their asking prices. Semi-detached properties in the eastern districts sold in only 8 days at 115 percent of their asking prices. The average sale price of semi-detached properties in Toronto’s eastern districts was $1,223,687. Across all of Toronto the average sale price for semi-detached was $1,326,462. Detached properties came in at $1,787,752.


Shockingly there were seven eastern districts that reported less than five semi-detached property sales – simply because there was no supply!


Fast sales and sale prices exceeding asking prices were not restricted to the City of Toronto. All property sales in Halton, York, and Durham region sold well above their asking prices, 101, 105, and 107 percent above asking, respectively, with all properties selling (on average) after only 15 days on the market.


The Toronto and region residential resale market is quickly moving towards crisis levels. Governments now have no one to blame but themselves, and hopefully are beginning to accept that the housing crisis can not be improved by restrictive legislation. At the federal level, there is a prohibition on foreign buyers purchasing residential properties in Canada. At the provincial level, there is a 25 percent (of the purchase price) tax on foreign buyers. At the municipal level (City of Toronto) there is a 1 percent vacancy tax. None of these legislative actions have addressed Toronto and the region’s housing issues. Toronto’s resale market is driven by domestic demand, as numerous studies have demonstrated. Population growth, which is expected to continue, requires appropriate levels of new housing, which have not been forthcoming. It is safe to forecast that the residential resale conditions that have clearly manifested themselves in April will continue and intensify as we move towards the second half of 2023.



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February 2023 Toronto Real Estate Report

There is no point in comparing February 2023 with February 2022. February 2022 was the apogee of the pandemic residential real estate market. The average sale price achieved last February, $1,334,544, remains, and will for some time, the all time monthly average sale price record. Interest rates were at an all time low, the Bank of Canada benchmark rate was a mere 0.25 percent and is now 4.50 percent. The pandemic had created a buying hysteria, which in conjunction with low mortgage interest rates, set the stage for the most egregious example of FOMO (the emotional response to the belief that others are living better, and that important opportunities are being missed, namely buying a home in the Greater Toronto Area).


In March of last year, the Bank of Canada began its steady and continuous implementation of higher rates, and the resale market began to tumble. The months long continuous decline appears to be over, a position supported by February’s resale market data.


In February there were 4,783 properties reported sold. Viewed from a historic perspective it has been decades since a February market has produced such low volumes. Viewed from a more recent perspective these numbers are encouraging.


February’s sales results are the best month since October of last year, when the market was in free-fall.

Significantly February’s performance was 6, 54 and 55 percent better than the market’s performance in November, December and January, respectively.


Similar to the volume of sales, the average sale price has also shown improvement. The monthly sale price has stabilized and is showing signs of increasing. In February the average sale price for the greater Toronto area came in at $1,095,617. In June of 2022 the average sale price had fallen to $1,145,804. Since then it has continued to fall until February’s performance.

February’s average sale price was 5.5 percent higher than the average sale price achieved in January.


The reason for these positive market changes is mortgage interest stability. As the chart below indicates, a recent Bloomberg survey of economists see the Bank of Canada rate hike cycle as having peaked at 4.50 percent.


As buying history has demonstrated, once the consumer has determined that stability has been achieved the market re-engage. That is what is beginning to happen. Since the benchmark rate is not expected to decrease dramatically until at least 2024, a gently strengthening market can be expected for the remainder of 2023.


One problem that buyers will have to contend with will be supply. In February only 8,367 new properties came to market, some no doubt being re-listed properties that did not sell at their initial list price. This number is more than 40 percent fewer listings than the 14,153 that came to market last February. Although the total number of active listings was 9,643 at the end of the month, that is substantially too few to meet market demand. This speaks to two prevailing market trends. Sellers are under no pressure to sell and at least for the time being are continuing to wait for a market improvement. Given that that market improvement is now here, over the next few months the market should see more supply, which in turn will see an increase in sales volumes.


Demand is demonstrated by the length of time properties remain on market before being reported sold. In February all properties sold in only 22 days, many in multiple offer competitions. Depending on location and property type the average days on market was substantially, in fact shockingly less – all semi-detached properties in the greater Toronto area sold in 15 days, while all semi-detached properties in Toronto’s eastern districts sold in an eyepopping 11 days, and at 106 percent of their asking price. This data indicates that the greater Toronto market, certainly on the demand side, is extremely robust, but constrained by affordability, low inventory and a slow adjustment to price expectations.


Very early March results indicate that the market’s performance is about 15 percent better than sales volumes achieved in February. If this pace continues (supply permitting with no further hikes in the benchmark rate) then March should achieve approximately 5,500 sales, if not more. That means we will see sales numbers thathavenotbeenachievedsinceAugustof2022.The market is finally showing signs of moving in a positive direction.


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January 2023 - Toronto Real Estate Market Report

As forecast in December, the slumping resale market of 2022 continued into the first month of 2023. Compared to January 2022, sales of all property types declined by almost 45 percent. Due to the extraordinarily strong pandemic market early last year, on a year-over-year basis sales volumes will post substantial negative variances until at least April. By April 2022, increased borrowing costs had begun to slow the residential resale market with an unprecedented impact. Since March of last year, sales volumes and average sale prices have consistently declined as borrowing costs have increased.


In absolute numbers, 3,100 properties traded hands in January. Last year, 5,594 properties were reported sold. The decline, both in sales volumes and average sale prices, is universal, impacting all housing types throughout the greater Toronto Region. There were, however, variations in these declines. In the City of Toronto, sales declined by more than 46 percent and average sale prices declined by almost 15 percent. In the 905 Region average sale prices declined by almost 20 percent and sales softened by slightly over 42 percent. Sixty five (65) percent of the total sales volume (3,100 properties) took place in the 905, with the City of Toronto accounting for only 35 percent (1,098) of all sales.


The average sale price for the entire Toronto Region came in at $1,038,668, a 16.4 percent decline compared to January 2022’s average sale price of $1,242,407, which at the time, was an all-time high average sale price record. Due to the preponderance of lower-priced condominium apartment sales in the City of Toronto, the City’s average sale price came in lower at $987,000, a number reminiscent of the City of Toronto’s pre-Covid average sale price.


Although there were more properties of all types available for sale in January compared to last year, this increase was due to declining sales, not sellers flooding the market with properties for sale. Quite the contrary. At the end of January 9,299 resale properties were on the market for sale, 125 percent more than the 4,140 properties available last year. It should be noted that only 7,688 new listings came to market in January, almost 4 percent fewer than the 7,983 homes that came to market last January. With so few properties coming to market, supply, which has been the Toronto and Region’s perennial problem, will once again become a massive home-buying roadblock when sales volumes begin to improve.


Demand is still present in the market and there are signs that it is intensifying. It is being constrained only by high borrowing costs. Toronto’s much sought after eastern districts reflect the intensifying demand. Notwithstanding the prevailing high borrowing costs, all detached properties that came to market sold in 21 days – the average market average was 29 days – and at 100 percent of asking prices. Even more telling were semi- detached property sales. All semi-detached properties in Toronto’s eastern districts sold in an eye-popping 18 days at sale prices 103 percent above asking prices. In fact, all semi-detached property sales throughout the City of Toronto took place in only 21 days and at 102 percent of asking.


The number of sales reported on a daily basis in the City of Toronto showed a marked increase after January 25th. On that day, the Bank of Canada announced its latest increase to be benchmark rate – 0.25 percent, taking the overall rate to 4.5 percent. More importantly, the Bank stated that its numerous rate increases since March of last year are reversing inflation and further rate increases may not be necessary. The moment potential buyers are convinced that rates are no longer increasing, the buyer inertia of the last 10 months will incrementally begin to dissipate.


Since February 2022, the average sale price in Toronto and Region has declined by more than 22 percent, to $1,038,668 in January 2023. The decline, coupled with the central Bank’s message that rates may have stabilized, with potential declines going forward, is the combination that will see the resale market reverse the course it has been on. The change, when it comes, certainly before the end of the first quarter, will see increased sales but with average sale price stability. Prices will not rise until borrowing costs decline substantially.

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December 2022 Toronto Real Estate Market Report

The Toronto and area residential resale market limped to the end of 2022, a continuation of the pattern that became clear and established as interest rates began to rise in March of this year. As the Bank of Canada continued its punishing benchmark rate hikes, both sales and average sale prices have been decimated. Once again, no surprises in December.

Here is what has happened to sales since the Bank of Canada commenced its rate hikes in March.

December’s sales results were more than 48 percent lower than the 6,013 properties reported sold last December. Since March the number of monthly sales has decreased by more than 70 percent. It should be noted however, December’s sales results have historically been the lowest in any year.

The trajectory of average sale prices in Toronto and area has been similar to monthly sales.

Last December the average sale price was $1,157,877. December 2022’s average sale price is almost 10 percent lower than last year. More significant is the dramatic tumble in prices since March. At the end of the year, prices are $247,455, or almost 20 percent, lower than they were in March. In the City of Toronto, primarily due to the preponderance of condominium apartment sales, the average sales price was even lower in December, coming in at $1,015,000.


The underlying driver responsible for the current market place is affordability. Even with a 20 percent decline in average sale prices since March, the even more accelerated rise in mortgage interest rates has made Toronto and area homes unaffordable, extremely unaffordable. A recent study by the National Bank has indicated that even with Toronto and area’s alarmingly lower average sale prices affordability is beyond the reach of all but a small number of buyers.


The National Bank reports that a mortgage on a typical home now takes up to 67.3 percent of a household’s income to service, the highest level of debt service since 1981. The Bank’s analysis indicates that to own a non-condominium home in Toronto, households need an annual income of $273,549 and many months of savings in order to have sufficient down payment funds to afford a “representative home” priced at $1,351,000. In December the average sale price for detached properties in Toronto was $1,627,000. Semi-detached properties came in at $1,162,000. For a representative condominium apartment, priced at $738,000, households need $174,466 in annual income. The average household income in Toronto in 2022 is approximately $105,000. That’s about $70,000 less than the price of a “representative” condominium apartment and almost $170,000 less than a “representative” freehold home. In December, the average sale price for condominium apartments in the City of Toronto was $741,584.


There is no good news in December’s resale data. Not only are sales and prices falling, but further declines can be expected. Unaffordability has forced even would-be buyers to downscale their expectations based on their ability to qualify and then service the debt that they will be assuming. As a result, gone are the days when Toronto and area’s average selling price exceeded list prices by as much as 120 percent. In December all properties reported sold came in with a sold price of only 98 percent of the asking price. In the City of Toronto it was lower at only 97 percent. In some trading areas, ratios were even lower. Even Toronto’s powerful eastern trading districts, which have not seen sales to list price ratios since 2008 below 100 percent came in at 99 percent.


Active available properties have increased over the last few months, a common result of declining sales but not excessively. In December there were 8,692 apartments, detached, semi-detached, and townhouse available to buyers, 169 percent more than the 3,231 active listings available last December.


Even though 2022 started with three strong months, January, February and March, the total number of annual sales was dismal. Only 75,140 properties changed hands, even less than the 78,017 sales reported in 2018 when legislative changes brought the resale market to a halt. Beyond 2018 its necessary to go back almost two decades to find a year when sales were as low.


Given the co-relation between mortgage interest rates, sales, average sale prices and affordability the immediate future of the Toronto and area residential resale market is self-evident.


The market will remain sluggish well into 2023, especially since the growth in Canada’s employment numbers will lead the Bank of Canada to further benchmark rate increases. Average sale prices will continue to decline. Unfortunately, buyers are constrained by a lack of affordability given the prevailing economic factors. Buyers simply can’t pay what sellers expect (hope?) to achieve for their properties, which ultimately will have the concomitant effect of bringing prices down.


There is no way of determining how low average sale prices must fall – it would be easier to forecast if the Bank of Canada’s position on rates was final – but a further 10 percent decline from December’s average sale price of $1,051,000 is a reasonable estimation. It won’t be until the beginning of the later half of the year, and perhaps even the end of 2023, when the residential resale market begins to show signs of growth. Growth but not a return to the halcyon days of the pandemic market. The Bank rate would have to return to 0.25 percent, an impossible likelihood.


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November 2022 Toronto Real Estate Market Report

December 12, 2022

In November only 4,544 residential properties were reported sold for the greater Toronto area. This is the lowest number of monthly sales recorded in 2022 and almost 50 percent fewer than the 8,979 sales reported for the same month last year. It has been almost 15 years since the market has seen numbers as low as those produced in November.


Although the average sale price has declined substantially since the spring, in fact it has declined by almost 20 percent, it appears to have stabilized. In November the average sale price for all residential properties sold in the greater Toronto area, including condominium apartments came in at $1,079,395, a 7.2 percent decline compared to last year. As the chart below indicates, there is a substantial range in average sale prices between condominium apartments and detached properties.


Average sales prices in the 905 Region have, since the pandemic market peak in February and March of this year, declined more dramatically than in the City of Toronto. The exodus from the city and its dense living conditions that drove prices up in the communities surrounding the city has greatly dissipated, and with that dissipation, average prices have declined.


One of the factors keeping average sale prices from falling below $1 million has been the lack of supply. In November only 8,880 new properties came to market compared to 10,044 last year, a decline in inventory of almost 12 percent. At this point in this evolving market, sellers are not under any pressure to get their properties on the market and sold. Most property owners in the greater Toronto area have locked into very favourable mortgage financing and it appears are prepared to wait for improved market conditions before making their properties available for sale.


Buyers are still in the market, notwithstanding the shifting market landscape. In addition to the lack of supply, they are constrained by the lack of affordability caused by rapidly rising mortgage interest rates and a wait-and-see attitude. Buyers are trying to determine if mortgage financing costs have stabilized and what their future direction might be, and if in turn home prices have reached the low point of their decline.


Unfortunately, it is too early to make this determination. As this Market Report was being prepared the Bank of Canada once again increased its benchmark rate. In February it was 0.25 percent, an unprecedented increase of 1,600 percent in only 9 months. It's not surprising that buyers are on the market sidelines, wondering where the residential real estate market is headed.


As painful as the latest increase in the Bank of Canada's benchmark rate maybe there is some positive light in the Bank's most recent announcement. In raising the rate to 4.25 percent, it indicated that further increase may be at an end. In the past, all rate hikes were accompanied by announcements stating that further increases could be expected, and they were delivered. This time the Bank indicated that it will assess the inflation landscape in January and depending on its findings, only then decide if further increases are necessary. If the Bank concludes that no further increases are necessary at its next meeting, that will be the signal that the real estate marketplace that we have been experiencing is at an end. At that time and the resale market will begin to adjust to the new normal which will result in greater buyer participation and increased sales.


 
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October 2022 Toronto Real Estate Market Report
As forecast in our September Market Report, sales have continued to decline on a year-over-year basis. In October 4,961 properties were reported sold in the greater Toronto area, almost 50 percent fewer than the 9,743 properties that changed hands last October. The decline in sales is a continuation of a pattern that started in March when the Bank of Canada began its fight against inflation by increasing its benchmark rate. The Bank further increased the benchmark rate by 0.5 percent in late October bringing the current rate to 3.75 percent. In early March the rate was 0.25 percent, an eyepopping increase of 1,400 percent.


Notwithstanding these incredible rate increases, which in turn have been reflected in rising mortgage interest rates, which currently range between 5.25 to 5.75 percent, there are aspects of the resale market that reflect its underlying strength and resilience. Although average sale prices are substantially lower than in February, over the last few months they have stabilized, and in fact are slowly rising.



Average sale prices hit a low of $1,074,052 in July. At this point rising mortgage interest rates were still being absorbed. Since then average sale prices have increased by almost 1.5 percent to $1,089,426, inspite of further mortgage interest rate increases.


Similarly, the number of monthly reported sales has also stabilized.


 


Monthly sales have plateaued around 5,000, again notwithstanding the impact of the rising benchmark rate and, even more surprising, the rise in average sale prices, albeit moderately, over the same period.


It should also be noted that the number of properties coming to market have also been decreasing. In October 10,390 new listings were posted on the Toronto Regional Real Estate Board’s MLS system, almost 12 percent fewer than the 11,749 listed last October.


Granted the number of reported sales is consistent with the reported sales in 2008 during the catastrophic downturn in the equity markets, these three factors stabilized sales, rising (moderately) average sale prices, and the declining number of new properties coming to market - portend what will happen to the Toronto and area resale market at the first sign that mortgage interest rates have stabilized, and more importantly when they reverse and start heading downward. When that happens the market will dramatically accelerate, returning to a pace reminiscent of pre-pandemic levels. Based on the Bank of Canada’s most recent pronouncement on the economy and inflation, that should happen by the second quarter of 2023. The Bank indicated that by the end of next year inflation should be reduced to 3 percent returning to 2 percent by 2024.



On November 1st, the Federal Government announced that it is planning a massive increase in the number of immigrants entering Canada, with a goal of bringing 500,000 new immigrants to this country by 2025. In the interim, over 400,000 new immigrants will be entering Canada in each of 2023 and 2024, and close to half of them finding their way to Ontario. All of these factors point to the resurgence of an incredibly strong resale market in the greater Toronto area. Notwithstanding the recent provincial government announcement of legislation designed to increase supply (More Homes Built Faster Act, 2022), optimistically by 1.5 million homes over the next decade, demand will painfully outstrip supply, creating pandemic-like resale market conditions.


Looking ahead to the end of 2022, what we have been experiencing, both in terms of sales and average sale prices and as setout in the charts in this Report, will continue with little change, except for a further seasonal slowdown in December and January of 2023.

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