07, 2022 - Market Analysis ARI

What trends are we seeing?

Number of transactions continue to decrease year over year with prices falling off the February 2022 highs yet still above 2021 year over year comparisons for July 2022.  The Bank of Canada raising the overnight interest rate to 2.5% on July 13, 2022, further exacerbated both buyer and seller hesitation to enter the market.  Year-over-year in the month of July, we saw a 1.2% increase in the average sale prices across the Toronto Regional Real Estate Board (TRREB) with townhouses showing a 5.5% increase and condominium with an 11.9% increase in average sale price. The rental market has become hot as prospective buyers have held off deciding to rent which has increased demand for rentals and prompted some sellers to convert into landlords taking advantage of the excess rental demand.  There has also been a corresponding drop in the number of new listings on a monthly basis; as a result, there is still only two months supply of properties which is not indicative of a buyer’s market (six months supply being a buyer’s market).

What lies ahead for 2022?

It is expected that we will see continued rate increases from the Bank of Canada before the end of 2022.  Buyers will begin to weigh the benefits of potential price drops versus increased carrying costs.  With approximately two months of supply, we are still a fair bit away from a Buyer’s market and with strong immigration expected the opportunity to purchase sooner than later may resonate with prospective buyers.  With proper financing in place, the buyer’s affordability may be similar to what it was pre-pandemic. From conversations with other realtors who consistently represent foreign buyers, an interesting difference exists between foreign and domestic buyers. Foreign buyer sentiment is centered around purchasing a property within an economically stable country, placing little weight on purchasing at the bottom of the real estate market. Domestic buyers on the other hand seem to focus more on timing the market. It’ll be interesting to see how overall buyer sentiment progresses moving forward. The market changes will likely come into perspective for both buyers and sellers with a realization that the peak of February 2022 should not be utilized as the benchmark as to whether to sell or to purchase and that a longer-term perspective for both the state of the market and the duration one will hold the asset should be taken.

What is Happening with Sale Prices?

The average sale price across all property types on TRREB for July went up by 1.2% year-over-year to $1,074,754 in July 2022 from $1,061,724 in July 2021. Month-over-month we saw a 6.2% decrease from June 2022 to July 2022 with average sale prices being $1,146,254 in June 2022. The illustration below compares the average sale price changes from July 2022 to July 2021, and June 2022 to July 2022, in Toronto and the Greater Toronto Area (GTA) broken down by product type:

Sale Price Comparison
Product Type Changes from July 2021 to July 2022 Changes from June 2022 to July 2022
Toronto GTA Toronto GTA
Detached -7.3% -1.9% -13.7% -3.1%
Semi-Detached +5.1% +2.2% -5.6% -2.3%
Townhouse +7.6% +5.5% -6.2% -2.4%
Condominium +4.3% +11.9% -3.5% -4.7%

 

Below we see the change in average sale price leading from month to month, starting from the peak in February 2022 to lows of July 2022. We also see the overall percentage change from February to July, which illustrates the current opportunity for buyers as history has proven that the market will eventually rebound and go back upwards.

Number of Transactions

The declining trend in number of transactions continues to fall in July 2022 with a drop of 47.4% when compared to July 2021 and a drop of 24.1% when compared to June 2022.

When comparing July 2022 to July 2021, we saw the following trend:

Categories July 2022 July 2021 Percentage Change
Number of Transactions 4,912 9,339 -47.4%
Number of New Listings 12,046 12,562 -4.1%
Number of Active Listings 15,334 9,731 57.6%

When comparing July 2022 to June 2022, we saw the following trend:

Categories July 2022 June 2022 Percentage Change
Number of Transactions 4,912 6,474 -24.1%
Number of New Listings 12,046 16,347 -26.3%
Number of Active Listings 15,334 16,093 -4.7%

 

Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in transactions when comparing July 2022 to July 2021 and June 2022. The breakdown per area and product type is as follows:

Number of Transactions Comparison
Product Type Changes from July 2021 to July 2022 Changes from June 2022 to July 2022
Toronto GTA Toronto GTA
Detached -43.6% -46.9% -36.1% -23.8%
Semi-Detached -36.1% -49.6% -30.3% -23.7%
Townhouse -45.2% -53.6% -17.7% -27.9%
Condominium -44.9% -47.5% -17.3% -21.6%

With the data shown above, the chart illustrates the different climate we’re in with respect to the real estate market. In the earlier months of 2022 where we saw the number of transactions peak in March at 10,955 transactions, we see July reach roughly half of that figure with 4,912 transactions. With summer closing around the corner, it’ll be interesting to see how or if buyer activity will pick up.

Footnote: Source of statistical data is from the July and May 2022 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.

 

A – Monthly Percentage Change in the Number of Units Sold

B – Month Over Month Average Price Percentage Change

C – Seasonally Adjusted Month Over Month Average Price Percentage Change

D – Monthly Percentage Change in Average Sale Price

Contact A Realtor

Fill in the form below and we will be in touch soon