The Toronto housing market is experiencing a resurgence as buyers return and competition heats up. According to the Toronto Regional Real Estate Board (TRREB), the average home price in the area has surpassed the average list price for the first time since May 2022.
In March, the average price of a home reached $1,108,606, compared to $1,096,519 the previous month. While still down nearly 15% from the peak price of $1,298,666 in March 2022, this increase indicates a positive shift in the market. Bidding wars, which were a common occurrence last year, kept the market at a frenzied pace.
Real estate professionals and the board interpret these numbers as a sign that the market is tightening after a sluggish period. Sales were lackluster, and prices started to decline as interest and mortgage rates soared. However, the situation has changed now. "For the month of March, we noticed more activity for listings, and with our buyers, we started to notice that our buyers are competing more and more with other buyers," said Nasma Ali, the broker and founder of the One Group, part of Real Brokerage. The increased competition among buyers highlights a renewed confidence in the market.
Image: A house in Toronto.
Potential Buyers Regaining Confidence
The TRREB's numbers indicate that potential homebuyers are regaining their confidence in the market, even as borrowing costs rise due to the Bank of Canada's interest rate hikes. Buyers are eager to avoid a situation where they wait too long and prices return to their previous peak. According to Ali, buyers are now being more conservative and cautious, bidding under asking prices. This approach has resulted in prices still being far from their 2022 peak.
Here's a breakdown of the average prices for different types of properties in Toronto:
- Detached homes: $1,468,651 (down 13.5% from a year ago)
- Semi-detached properties: $1,087,924 (down over 17%)
- Townhouses: $935,626 (a 14% decrease)
- Condos and apartments: $703,566 (a 13% decrease)
While prices have dropped on a year-over-year basis, TRREB found that the composite benchmark price for March was $1,118,500, representing an increase on both an actual and seasonally adjusted basis.
Image: A vibrant housing market.
The number of sales in March saw an increase compared to February, with 6,896 sales recorded. However, this is still a significant decrease of almost 37% when compared to March 2020.
Subdued Sales Activity Last Month
Priscilla Thiagamoorthy, a BMO Capital Markets senior economist, characterized the home sales activity in March as "subdued." However, she noted that market conditions are tightening, and more buyers are starting to enter the market as interest rates stabilize. On the other hand, sellers are being more cautious and holding off on listing their properties in the hopes of fetching higher prices, like their neighbors did at the peak last year. As a result, new listings declined by 44% compared to the previous March, with only 11,184 properties listed.
These findings align with TD Economics economist Rishi Sondhi's note to investors, suggesting that Canadian home sales may have reached a trough. Sondhi forecasts quarterly sales gains and anticipates stronger growth in the second half of the year. However, he cautions that this shouldn't be taken as a sign of long-term strength, as 2023 is likely to be the softest sales year since the early 2000s in both Ontario and British Columbia.
Image: A sold sign in front of a house.
In comparison, the Real Estate Board of Greater Vancouver reported a 42.5% decrease in home sales in March compared to the previous year, with total sales lagging 28.4% below the 10-year seasonal average.
The return of buyers and the increase in competition in the Toronto housing market is a promising sign for the industry. As the market tightens and interest rates stabilize, potential homebuyers are regaining their confidence and finding opportunities in the city's diverse real estate landscape.
