Monthly Market Report: July 2023

Dated: October 1 2023

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Home sales and the average selling price in the Greater Toronto Area (GTA) in June 2023 remained above last year’s levels. “The demand for ownership housing is stronger than last year, despite higher borrowing costs. With this said, home sales were hampered last month by uncertainty surrounding the Bank of Canada’s outlook on inflation and interest rates, and July 12th the Bank of Canada again increased its policy rate 25 basis points.  The Bank of Canada increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

Furthermore, a persistent lack of inventory likely sidelined some willing buyers because they couldn't find a home meeting their needs.

Simply put, you can't buy what is not available,” said Toronto Regional Real Estate Board (TRREB) President Paul Baron.

 

The housing market in the Greater Toronto Area (GTA) is displaying mixed signals, indicating a potential impending shift.

 
 
In June, the average price of properties in the GTA decreased by $13,972, resulting in a final price of $1,182,129.

However, when compared to the previous year, average sale prices have still seen a significant increase of $35,875. This is the first occurrence in 2023 where month-over-month values dropped, but it also marks the first positive yearly comparison.

Despite the slight decline in prices, overall inventory levels have continued to sluggishly rise, with 14,107 active listings at the end of June.

While this represents a month-over-month increase of over 2,000 properties, the final total is still the second-lowest June total inventory over the past decade, low inventory has intensified the competition among buyers for the limited available properties.

 

Sales, however, are still happening at a rapid pace, with properties selling on average in just 14 days for the second consecutive month.

 
 
The number of active listings remains well below the monthly 10-year average, currently sitting 19% lower than historical levels.tion
The market absorption rate remains remarkably robust, with 52.5% of available listings being sold in June, and properties achieving a sales price of 104% of the list price.
 

As the summer months begin, the Greater Toronto market remains active.

 
 
Home sales have experienced a surge of 944 sales compared to June 2022.

Multiple offers are still prevalent, leading to sale prices surpassing the initial asking prices for the fifth consecutive month.

Despite a 0.25 basis point interest rate increase in June, and now another 0.25 increase in July, buyers who have already secured pre-approved mortgages are likely to take advantage of their rate hold and make their purchases before the rate hold expires.

 

The GTA housing market is experiencing a complex mix of indicators, suggesting a potential shift in the near future.

 
 
While average prices have decreased slightly, the market remains active, with rising competition and rapid sales

Comparing current average sales prices to the market highs of 2022, semi-detached properties are down 10%, townhouses are down by 13%, and detached properties have decreased by 14%.

The market's performance in different asset classes varies, with the semi-detached market showing strength and condos experiencing a slight decline. Despite short-term fluctuations, the long-term appeal of real estate investments in the GTA remains promising.

However, the low inventory levels and limited availability pose challenges for prospective homebuyers.

Investors continue to play a significant role in the market, which has become a global investment hub.

 

A resilient economy, tight labour market and record population growth kept home sales well above last year’s lows

 
 
The Bank of Canada’s interest rate increase this month and its guidance on inflation and borrowing costs for the remainder of 2023 will help us understand how much sales and price will recover beyond current levels,” said TRREB Chief Market Analyst Jason Mercer.

“GTA municipalities continue to lag in bringing new housing online at a pace sufficient to make up for the current deficit and keep up with record population growth.  With new listings lagging demand, it is adding pressure to prices.

“In addition to the impact of the listing shortage, housing affordability is also hampered on an ongoing basis by taxation and fees associated with home sales and construction as well as the general level of taxation impacting households today.

Going forward, we need to look at all of the factors influencing the household balance sheet and people’s ability to house themselves,” stressed TRREB CEO John DiMichele.

 

Notable, Quotable, Quotes!

“It is not in the stars to hold our destiny, but in ourselves.”
William Shakespeare

“One of the greatest regrets in life is being what others would want you to be, rather than being yourself.”
Shannon L. Alder

“One of the hardest things in life to learn is which bridge to cross and which bridge to burn.”
David Russell

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Davis Muscovitch Team

Residential Real Estate specializing in the central core of Toronto: Rosedale, Annex, Summerhill, Yorkville, Forest Hill, Cedarvale, Casa Loma, Wychwood Park, Hillcrest, Regal Heights, Seaton Village,....

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