What Trends Are We Seeing?
It seems almost surreal to see that within approximately 12 months of what is considered by many as the peak real estate market in Toronto and the Greater Toronto Area (GTA) we have returned to the competitive environment of last year. Throughout the industry, we hear not just that there is competition, but, that a dizzying number of offers as high as 43 on a single property is happening. While average prices have increased by 2.5% from the prior month, that doesn’t tell the entire story. The price escalation on a week over week basis is increasing by anywhere between $25,000 to $150,000 depending on the pocket and price point.
The competitive environment is being driven by a combination of buyer comfort and concern. Comfort that interest rates are not moving substantially from the current space; and, in fact may decline as we approach the end of 2023 and start of 2024. Concern that with multiple offers and lack of new residences being built the average price of the resale inventory may reach a new price ceiling that may exceed past record setting figures. These two forces are bringing buyers into the market to compete for a reduced number of opportunities.
Toronto Regional Real Estate Board (TRREB) reported that there was a 44% increase in transactions from February 2023 to March 2023. This indicates that more sellers are comfortable to bring their properties to market. Many sellers considering their next lifestyle move are becoming pragmatic with a small sense of excitement. Realism seems to have set in: it is easy to see in many pockets that today’s prices are similar to or exceed those of 2021 which most sellers would have been happy to have sold at that time; and, are now taking the six-month peak period from late 2021 to early 2022 with a grain of salt. The excitement is entering into the sellers’ mindset as they witness the boiling hot market and seeing how a select few neighbours who decided to enter the early Spring market have sold and increased their wealth position substantially as they reaped the benefits of their decision to sell.
What Lies Ahead?
Much of what lies ahead will depend on how many sellers decide to sell and thus impact the supply and demand cycle. The most recent experience makes it clear that there is a very deep pool of buyers willing to enter into the real estate market. Should there be a flood of sellers to the market we may see an easing of price pressure with greater alternatives for buyers to consider. The probability of any substantial decrease in demand seems low. Although the Bank of Canada may be in a position to consider increasing interest rates nominally again due to any gap between the US interest position and Canadian interest rate position, the employment figures remain strong and consumer confidence during the first half of 2023 is surprisingly high; and, thus would likely take a major event to change its direction.
What is Happening with Sale Prices
Average sale price for all property types for the month of March decreased by 14.9% year-over-year to $1,108,606 in March 2023 from $1,298,666 in March 2022. Month-over-month we saw a 6.94% increase from February 2023 to March 2023. On TRREB, for Toronto and the GTA, when broken down by product type and comparing March 2022 to March 2023 and February 2023 to March 2023, the average sale prices changes are as follows:
| Sale Price Comparison | ||||
| Product Type | Changes from March 2022 to March 2023 | Changes from February 2023 to March 2023 | ||
| Toronto | GTA | Toronto | GTA | |
| Detached | -10.8% | -14.3% | -0.2% | + 3.12% |
| Semi-Detached | -18.3% | -17.6% | -1.3% | + 4.0% |
| Townhouse | -12.9% | -14.2% | -3.1% | + 0.9% |
| Condominium | -11.9% | -15.1% | + 0.6% | -2.57% |
Number of Transactions Trend
When comparing March 2023 to March 2022, we saw the following trend:
| Categories | March 2023 | March 2022 | Percentage Change |
| Number of Transactions | 6,896 | 10,862 | -36.5% |
| Number of New Listings | 11,184 | 20,061 | -44.3% |
| Number of Active Listings | 10,120 | 10,157 | – 0.4% |
When comparing March 2023 to February 2023, we saw the following trend:
| Categories | March 2023 | February 2023 | Percentage Change |
| Number of Transactions | 6,896 | 4,783 | +44.18% |
| Number of New Listings | 11,184 | 8,367 | +33.67% |
| Number of Active Listings | 10,120 | 9,643 | +4.95% |
Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in number of transactions when comparing January 2023 to January 2022 and December 2022. The breakdown per area and product type are as follows:
| Number of Transactions Comparison | ||||
| Product Type | Changes from March 2022 to March 2023 | Changes from February 2023 to March 2023 | ||
| Toronto | GTA | Toronto | GTA | |
| Detached | -38.7% | -37.6% | +38.17% | +46.52% |
| Semi-Detached | -39.0% | -45.4% | +40.28% | +38.82% |
| Townhouse | -40.1% | -35.0% | +42.86% | +41.97% |
| Condominium | -33.8% | -29.7% | +48.10% | +41.35% |
Footnote: Source of statistical data is from the March 2023 and February 2023 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.
UPDATED ARI GRAPHIC
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
