Market Update for January 6th

Even fast-rising mortgage rates couldn’t stop the rise of Toronto real estate prices in 2022.The average selling price of all GTA homes was up 8.6% or $1,189,850 in 2022, up from $1,095,333 in 2021, the Toronto Regional Real Estate Board (TRREB) reported. For the City of Toronto, the average selling price was up 8% or $1,140,595 for 2022 compared to $1,056,503 in 2021. 

The annual gain was due mainly to the strength of last January and February’s market when prices peaked at $1.33 million. In March, the Bank of Canada began raising interest rates, and that slowed activity but didn’t immediately push down prices on a yearly basis, said Jason Mercer, the real estate board’s chief market analyst. “Even as we moved through some of the summer months, we were still seeing prices up on a year-over-year basis,” he said. “But that annual rate of growth was certainly trending lower through the year at the point where now we’re obviously down on a year-over-year basis.”

Generally, the 905 communities saw the biggest drop in home prices. Detached houses in the City of Toronto fell 4% to an average selling price of $1.63 million, compared to 905 detached homes, which fell 16.4% to $1.31 million on average. 
 
There were 75,140 sales reported through TRREB’s MLS System in 2022. That’s down 38.2% compared to the 2021 record of 121,639. The number of new listings amounted to 152,873 – down 8.2% compared to 166,600 new listings in 2021. With the supply of new listings being down, this helps to explain why selling prices have found some support in recent months.“We’re starting to see a flat-lining in terms of prices and I think that trend is going to carry forward through the first half of 2023, give or take,” Mercer said.
 
As we look forward to 2023, there will be two opposite forces impacting the housing market. On the one hand, we will continue to feel the impact of higher borrowing costs. On the other hand, record levels of immigration will support demand for ownership and rental housing. However, mortgage rates are expected to remain at relatively elevated levels and the central bank has said its interest rate hiking cycle is not over yet. Let’s see what the Bank of Canada does on January 25th.