Toronto Housing Market Forecast

Toronto Housing Market

Home sales in the GTA declined during June and home prices too sunk just a little.  GTA Real Estate Prices declined by $56,000 vs May and are now down $130,000 from their peak heights. See the city by city declines below.

TRREB President Kevin Crigger believes home sales have been impacted by affordability issues and mortgage rate hikes, along with the psychological impact of homeowners putting purchases on hold in case of a housing market downturn or collapse.

The economics of Toronto’s housing market couldn’t be more complex and we’re in a period of shifting demand and supply, along with significant government meddling. Expert forecasters are reworking their 2023 predictions for the Toronto real estate given affordability has disappeared.

Prolonged Inflation and Rising Interest Rates Will Erode Demand

What’s not discussed enough is the effect of prolonged interest rate hikes by governments who appear unwilling to fight inflation any other way. With US inflation hitting 9.1% today, some homeowners will be more eager to sell their home before a faster slide hits the GTA market. You can view the price slide below and without a doubt, buyers will be more patient to see just how far this slide goes by October.

See the city by city home price chart below for home price growth last month to up to 5 years previous.

Interest Rates and Inflation Raising Doubts

The BofC just raised the benchmark interest rate by a full 100 points which can only hasten the slowing of housing sales and pushing up the cost of credit. For the indebted homeowner, it’s a serious threat.

Home prices unfortunately haven’t fallen much nor have rent prices.  Mortgage rates had a brief moment of decline, but should reverse this week. The US announced its June inflation numbers of 9.1% growth in June. And that inflation rate be will influence Ontario’s rates in the summer.

Employment in the GTA region has been strong. Canadian wage growth overall in June was 4% and manufacturing wages have jumped 8.2%) while retail wages are up 11.7%.

Summer economic scene in the GTA is Good

The economic situation currently is okay, but dark clouds are forming quickly. Oil prices have dropped which can only benefit Ontario and the GTA horseshoe region’s cost picture. So while homebuyers can’t afford or are cancelling home purchases, they appear to be earning more, which may contribute to inflation, rising rent prices, resulting in more interest rate rises. And supply? It appears we’re going to see a big drop after the current releases are absorbed.

StatsCan reports Toronto unemployment sits at a high 6.2% while surrounding communities such as Hamilton, Oshawa, and central Ontario sit in the mid 4’s. Based on employment data then, it seems we have support for the Toronto housing market.

The HPI index shows home prices are leveling off but not plummeting by any means. With strong employment, wages, and personal savings, and supply shortages, it would take a major economic crash to crash the GTA housing market.

Toronto home price chart. Screenshot courtesy of TRREB.
Toronto home prices by region. Screenshot courtesy of TRREB.

Days on market has risen about 40% year over year to 24 days.

The Toronto rental market according to TREBB is in worse shape than ever. Rent prices have risen 18%, and number of rentals are down, sales are meager with buyers backing out, affordability poor, with new listings down a brutal 42.6% 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.

The average home price across the GTA hit $1,146,254 for 5.3% gain year over year. Detached home prices were $1,737,00 for single detached homes in the 416 area code (+2.4%) while sat at $1,362,862 in the 905 region (up 2.4%).

Toronto Home Prices.
Toronto Home Prices. Screenshot courtesy of TRREB.
GTA Home Prices city by city.
GTA Home Prices city by city. 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 June 2022 March 2022 July 2021 August 2020 August 2017 Price Change last 3 Months
Price Change Last 58 months
Burlington $1,610,579 $1,638,040 $1,365,547 $1,184,945 $944,564 -2% 71%
Halton Hills $1,303,862 $1,564,270 $1,178,832 $1,046,213 $984,812 -17% 32%
Milton $1,352,357 $1,712,357 $1,285,132 $1,044,360 $866,650 -21% 56%
Oakville $1,927,887 $2,362,508 $1,920,531 $1,582,531 $1,314,363 -18% 47%
Brampton $1,245,243 $1,573,497 $1,214,841 $989,039 $766,831 -21% 62%
Caledon $1,675,049 $1,903,025 $1,660,778 $1,185,251 $1,028,591 -12% 63%
Mississauga $1,605,497 $1,756,910 $1,551,658 $1,307,832 $1,066,015 -9% 51%
Toronto West $1,577,412 $1,683,450 $1,382,361 $1,270,053 $919,916 -6% 71%
Toronto Central $2,551,509 $2,725,902 $2,542,478 $2,385,278 $2,113,130 -6% 21%
Toronto East $1,322,871 $1,529,864 $1,242,729 $1,118,506 $887,620 -14% 49%
Aurora $1,739,232 $1,981,617 $1,535,884 $1,259,424 $1,144,094 -12% 52%
E Gwillimbury $1,390,588 $1,621,299 $1,425,091 $1,023,943 $966,047 -14% 44%
Georgina $965,034 $1,130,155 $943,194 $731,183 $604,838 -15% 60%
King $2,624,643 $2,737,753 $2,127,595 $1,774,480 $1,768,333 -4% 48%
Markham $1,761,335 $1,997,702 $1,710,577 $1,465,417 $1,319,860 -12% 33%
Newmarket $1,297,106 $1,552,840 $1,223,591 $1,050,862 $901,055 -16% 44%
Richmond Hill $1,674,827 $2,051,273 $1,834,311 $1,563,718 $1,466,884 -18% 14%
Vaughan $1,746,883 $2,044,573 $1,633,544 $1,389,040 $1,348,649 -15% 30%
Whitchurch Stouffville $1,575,563 $1,978,605 $1,669,468 $1,219,385 $1,024,941 -20% 54%
Ajax $1,102,049 $1,373,496 $1,052,753 $862,454 $708,185 -20% 56%
Brock $960,933 $1,057,415 $764,293 $660,183 $508,615 -9% 89%
Oshawa $885,677 $1,099,404 $882,096 $672,522 $550,677 -19% 61%
Pickering $1,487,008 $1,511,459 $1,217,165 $973,291 $812,643 -2% 83%
Scugog $1,215,810 $1,298,531 $988,223 $919,542 $719,375 -6% 69%
Uxbridge $1,424,736 $1,560,469 $1,435,744 $1,089,997 $792,233 -9% 80%
Whitby $1,122,716 $1,399,956 $1,089,938 $886,322 $733,811 -20% 53%
Orangeville $1,021,716 $1,194,537 $853,674 $705,254 $612,974 -14% 67%
Bradford West Gwill $1,154,536 $1,458,031 $1,155,989 $874,168 -21% N/A
Innisfil $1,021,838 $1,230,745 $890,940 $766,834 $549,492 -17% 86%

Zolo stats show listings down strongly up to April 13th, while sales to list price still going strong.

Toronto house prices by bedroom. Screenshot courtesy of Zolo.

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.

GTA Housing Sales March 2022

Detached home sales and prices march 2022
Screenshot courtesy of TRREB. Detached home sales and prices march 2022

The average price for all home types combined was $1,697,396 on only 4480 home sales in the GTA.

See the detailed price chart for Toronto districts below.

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).

GTA Prices

King, Markham, Brampton, Toronto Central, King, Whitchurch/Stouffville saw big gains in house prices while Bradford, Brock, Innisfil, Milton, Halton Hills, and Burlington suffered sizable losses in price.  It seems buyers cannot find the houses they’re hoping for far from the city, or they are having issues about the commute to Toronto to work.  See more on the Toronto condo market report. As we progress to summer, condos will become the big Toronto housing market story. But for now, houses are the object of everyone’s affections.

Take a look at the home price rises of the last 4 years. This is the shocking stat that most buyers and politicians have lost site of. This really is an election issue, as we head to even higher prices and less housing supply in the GTA. GTA housing stats courtesy of TRREB.

GTA Condo Prices February

Is a housing market crash even thinkable, given the recovery is so near?  Is a quick downturn more likely in 2022 as government stimulus in the US dries up?

Work from home won’t end as employers will cringe at continuing to pay Toronto commercial office rents and are buoyed by the lower cost of remote working.  Yet the exodus from the inner city in Toronto will slow as practical issues of high home costs, lack of home supply, and distance to the office take over.

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.

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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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