Toronto Housing Market

Governments might be hoping higher interest rates will slow inflation in Canada, but so far, it’s not working well.

Home sales in the Toronto region rose substantially vs July. In July, only 4912 home sales occurred, and that jumped surprisingly to 5627 sales in August. That number represented a drop of 34% year over year.

Yet home prices actually rose in August from $1,074,754 in July to $1,079,500 last month.  August of course, saw a short respite from rising mortgage rates, which are back up above 5%. The Bank of Canada raised their rate 3.25% which is the highest level since early 2008.  Jimmy Jean, VP and chief economist with Desjardins Group, believes the BoC is committed to raising lending rates for as long as it takes to reduce inflation to below 3%.

The Canadian inflation appears to be in decline from its high of 8.1% in June, however it may take quite a while to move it down to 3%. It’s likely mortgage rates will stay high, giving every refinance and mortgage buyer a lot of financial pain.

Buying right now is not a good idea for most buyers given mortgage payments are so high, and with the specter of rising unemployment throughout the coming winter. Energy costs are also very high which makes the full proposition of buying in the GTA a tough prospect.

Compared to last August, home sales declined 34.2% yet prices are surprisingly up by $9000 on average.  This means rates will have to rise much further and unemployment rise to get inflation under control. Since a lot of inflation emanates from the US, it exacerbates the peristence of inflation in Canada and Ontario.

TRREB’s President TRREB President Kevin Crigger called for the Federal Government to remove the mortgage stress test to allow more buyers to buy homes. He was referring to existing mortgage holders who want to shop for the best possible rate at renewal.

At this point, many real estate market pundits, experts and Realtors believe there is the possibility of a Toronto housing market crash.  Yet, it’s more likely we’ll see a continuous slide until February, and then there is the possibility of prices falling off a cliff.  There are predictions of a 30% price drop by the spring.

Employment in the GTA region has been strong.  Unemployment dropped to 6.1% in July, yet employment growth hit 7%.

Total sales and price in August during August
Screenshot courtesy of TRREB. Total sales and price in August.
New listings and days on market in August
Screenshot courtesy of TRREB. New listings and days on market in August
Home price index for Toronto region.
Home price index for Toronto region. Screenshot courtesy of TRREB.

Detached homes are the preferred housing type yet sales have plummeted 29.5% year over year. Townhouses suffered the worst performance with sales down 44.6% in the 416 region alone. Semi detached saw the sharpest price drop of 7.3% in the 416 region.

Toronto Housing Stats for each area code.
Stats for each area code. Screenshot courtesy of TRREB.

The Toronto rental market according to TREBB is in worse shape than ever. Rent prices have risen 18%, and the number of rentals are down, sales are meager with buyers backing out, affordability is poor, with new listings down  .7% year over year.

House Sales Drop in June

House sales have sunk 44.3% in the 905 region, while condo apartments in the 416 area code fell 38.5% year over year.

City by City home sales and prices in GTA region.
City by City home sales and prices in GTA region. Screenshot courtesy of TRREB.
City of Toronto home sales and prices.
City of Toronto home sales and prices. Screenshot courtesy of TRREB.

Homeowners Intent to Sell

Surveys of homeowners suggested a strong intent to sell in the last 6 months, however that simply did not come true. Sales are down, listings are few despite that right now is an ideal time to sell.

Will Toronto home prices fall in 2023 as a recession quickly approaches?  What will be saying about price forecasts as we look back at 2022.  How fast could prices drop? And what is the risk of a housing market crash in Toronto? See the Calgary housing market and Vancouver housing market reports for comparison.

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Although the recovery was poised to take off this spring, rising interesting rates, an ailing and debt loaded small business sector teetering on collapse, fast rising inflation and too high gasoline prices, along with fears of stagflation are coloring a vastly different forecast for markets.  These factors may deter many buyers from buying at home at what is the peak of the market. Few are talking about a housing market crash, but some are wondering about 2023.

GTA City by city home prices (data courtesy of TRREB)

As the chart reveals, price declines were steepest in the last month in Whitchurch/Stouffville, Brampton, Milton, Whitby and Ajax have enjoyed 20% or more in home sale value in the last 3 months.  Pickering, Innisfil, brock, Pickering and Burlington have seen the strongest price growth in last 5 years.

Babyboomers wanting to cash out for those big 5 year gains, will want to contact a Realtor to get prepared.

Compare detached house price growth, city by city in the last 5 years:

Toronto Region Cities August 2022 June 2022 March 2022 August 2017 Price Change last 2 Months
Price Change Last 5 years
Burlington $1,519,733 $1,610,579 $1,638,040 $944,564 -6% 61%
Halton Hills $1,266,831 $1,303,862 $1,564,270 $984,812 -3% 29%
Milton $1,232,179 $1,352,357 $1,712,357 $866,650 -9% 42%
Oakville $2,163,399 $1,927,887 $2,362,508 $1,314,363 12% 65%
Brampton $1,188,060 $1,245,243 $1,573,497 $766,831 -5% 55%
Caledon $1,529,900 $1,675,049 $1,903,025 $1,028,591 -9% 49%
Mississauga $1,521,265 $1,605,497 $1,756,910 $1,066,015 -5% 43%
Toronto West $1,648,298 $1,577,412 $1,683,450 $919,916 4% 79%
Toronto Central $2,609,829 $2,551,509 $2,725,902 $2,113,130 2% 24%
Toronto East $1,187,602 $1,322,871 $1,529,864 $887,620 -10% 34%
Aurora $1,483,702 $1,739,232 $1,981,617 $1,144,094 -15% 30%
E Gwillimbury $1,375,136 $1,390,588 $1,621,299 $966,047 -1% 42%
Georgina $894,234 $965,034 $1,130,155 $604,838 -7% 48%
King $2,403,002 $2,624,643 $2,737,753 $1,768,333 -8% 36%
Markham $1,697,462 $1,761,335 $1,997,702 $1,319,860 -4% 29%
Newmarket $1,220,136 $1,297,106 $1,552,840 $901,055 -6% 35%
Richmond Hill $1,819,159 $1,674,827 $2,051,273 $1,466,884 9% 24%
Vaughan $1,689,358 $1,746,883 $2,044,573 $1,348,649 -3% 25%
Whitchurch Stouffville $1,566,208 $1,575,563 $1,978,605 $1,024,941 -1% 53%
Ajax $1,051,887 $1,102,049 $1,373,496 $708,185 -5% 49%
Brock $759,846 $960,933 $1,057,415 $508,615 -21% 49%
Oshawa $855,400 $885,677 $1,099,404 $550,677 -3% 55%
Pickering $1,267,690 $1,487,008 $1,511,459 $812,643 -15% 56%
Scugog $963,147 $1,215,810 $1,298,531 $719,375 -21% 34%
Uxbridge $1,421,100 $1,424,736 $1,560,469 $792,233 0% 79%
Whitby $1,083,635 $1,122,716 $1,399,956 $733,811 -3% 48%
Orangeville $875,952 $1,021,716 $1,194,537 $612,974 -14% 43%
Bradford West Gwill $1,151,654 $1,154,536 $1,458,031 0% na
Innisfil $900,739 $1,021,838 $1,230,745 $549,492 -12% 64%


Zolo Housing Sales Report September

Zolo’s report indicates shows a $200,000 price drop from 3 months previous for all detached houses sold in the GTA. Condo prices fell $13,000 overall except for 2 bedroom units which rose $12,000 on average.

Housing Affordability Can be Eased if Homeowners Decide to Cash in on the Bonanza

It’s a frightening context for real estate and housing given rental listings are down almost 50% from last year. This is a crisis of significant proportions given immigrants are pouring in over our borders.  Homeless deaths rocketed over 200 last year.  If interest rates rise too rapidly, home loan borrowers will find mortgage payments too high and more homeless will be hitting the streets.

The lack of outcry about housing in the GTA area is alarming. The pandemic may have made Ontarians even more apathetic, and this means the necessary political will is lacking to build homes.  Builders are already pulling back on construction projects due to expected buyer withdrawal and economic recession.   Politicians may not want to see real estate values fall, and they have a belief in a high density/high cost,  anti-sprawl agenda means these problems won’t be solved.

TREBB’s President Kevin Crigger knows it and reiterated what his predecessors said many times “Evidence-based decision-making should inform government policies, and we encourage representatives at all levels of government to think big and act decisively to improve needed housing supply in a significant way.

So when homeowners do sell their homes and condos, it is the best short term solution to the housing crisis in Canada.

Toronto Housing Market Forecasts 2022

Royal Lepage predicted price growth would reach 11% in Toronto this year, with condo prices even hotter at 12% growth.  Now it has revised its Canadian house price outlook for a 5.0% increase, year over year, and that is down from their April estimate of a 15.0% year-over-year increase for the fourth quarter.

Phil Soper then reiterated the fact that Toronto and Canadian home shortage situation cannot be solved overnight. The fact is, the shortage will steepen, and with rising incomes and mortgage rates demand unfortunately is sagging just as we had an opportunity to address our biggest social problems.

What’s chronically understated in the outlook is the US, Canadian and Global economic recovery. 2021 saw rising employment, strong housing demand and mobility along with rising wages. Wages are there, but the economic forecast is weakening. There’s little way Royal Lepage’s experts could foresee these events. It’s all politically driven and often outside Canadian borders.

One positive for Ontario is the increasing trade surplus with the US, and a highly favorable dollar. If oil prices plunge in 2023, this will Ontario’s economy a boost and support the Toronto housing market.

Royal Lepage’s 2022 Predictions

Home Prices Forecasts 2022 for Toronto Montreal Vancouver. Screenshot courtesy of Royal Lepage Report and Forecast.

Remax 2022 Toronto Housing Forecast

Remax forecast home prices in Toronto will rise 10% in 2022 to a new level of $1,160,491.

Screenshot courtesy of Re/max.

The GTA Toronto Market

TRREB reports the MLS® Home Price Index Composite Benchmark rose an astonishing 24.2% over the last 12 months. Only a housing market crash could cool that trend.  In November, The MLS® Home Price Index composite benchmark rose 28.3% YoY.  The average home price rose 21.7% vs last November to $1,163,323.

GTA REALTORS® reported home sales increased 3.3% year over year (9,017 transactions) setting the new record. New listings however fell 13.2% YoY.

Screenshot courtesy of TRREB. City of Toronto home prices by districted.

Right now is a good time time to sell your home. And you can sell your home fast with perhaps no commission, or sell it for more using a Realtor with a strong digital marketing strategy. Big demand and bidding wars means no price is too outlandish. Buyers are desperate.

The Toronto condo segment has recovered well and is expected to continue given the shortage of units, the demand from new immigrants, returning workers to the high density housing in GTA urban areas (Toronto).

The lack of housing supply is making finding a home in the GTA very difficult. It is real estate in Vaughan, Bradford, Newmarket, Aurora, Richmond Hill, Milton, Stouffville, Pickering and Whitby that everyone is after.

Interestingly though, CMHC with its Toronto real estate market crash style scenario. CHMC said Toronto (and Vancouver homes) are highly overvalued and a drop of prices in the neighbourhood of 20% is coming.  With all due respect to CMHC, they should avoid looking at fundamentals, because human market demand is an emotional thing.

With mortgage rates so low, there’s a desperation among young buyers to buy and lock in at low rates.

With mortgage rates at historic lows and loan refinancing still frequent, the market is loosening up. However, with Covid still actives, US trade tensions heightening, and the US election in two months, we’re hearing more talk about a housing market crash. And a Toronto housing market crash is possible if the US economy should collapse.

As you can see in the monthly Toronto GTA region prices and sales details, upward momentum is strong.  The growth in prices in each regions is astonishing and there is little to suggest it will slow into the fall season.

See more on the Vancouver real estate market, Calgary real estate market, Okanagan real estate market and the York region real estate market.

Compare Toronto’s property market outlook to the US housing market forecast.  You can view the prices for each city and MLS district below. Also, keep an eye on Toronto condo prices as the pandemic passes.

Homebuyers are still willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north.

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