It’s been a tough year for the Greater Toronto Area housing market, with both sale volumes and sale prices taking a tumble. Amidst higher interest rates and increasing unaffordability, many would-be buyers moved to the sidelines in 2023, wanting to hold off on purchasing plans until rates come back down.
As a result, sales slipped, and prices followed.
Home sales in the GTA totalled just 65,982 for 2023 — a 12.1% decline from 2022 — according to new data from the Toronto Regional Real Estate Board (TRREB).
The number of new listings observed a similar trend, falling in 2023 compared to 2022. This finding came despite an uptick in listing levels seen during the spring and summer, as the last three months of the year saw consecutive decreases in homes coming on the market.
Even as listings fell, TRREB Chief Market Analyst Jason Mercer notes that those who bought in the less competitive market “benefitted from more choice throughout 2023.”
“This allowed many of these buyers to negotiate lower selling prices, alleviating some of the impact of higher borrowing costs,” he said.
To that point, the average selling price for all home types in 2023 fell 5.4% from 2022 levels to $1,126,604. The biggest hits were taken in the 905 region, where price declines for each type of housing were greater than those in Toronto. Detached home prices in the 905 area, for example, fell 6.2% compared to 3.7% in Toronto. Townhouses in the 905 region saw prices fall 4.6%, whereas they fell 2.2% in Toronto.
But these downward trends may not continue in 2024, Mercer notes.
“Assuming borrowing costs trend lower this year, look for tighter market conditions to prompt renewed price growth in the months ahead,” he said.
TRREB’s new president, Jennifer Pearce, is similarly hopeful for the new year, anticipating that the issues that plagued the market in 2023 could be on their way out.
“High borrowing costs coupled with unrealistic federal mortgage qualification standards resulted in an unaffordable home ownership market for many households in 2023,” Pearce explained. “With that said, relief seems to be on the horizon. Borrowing costs are expected to trend lower in 2024. Lower mortgage rates coupled with a relatively resilient economy should see a rebound in home sales this year.”
If December is any indicator, there have already been some moves in a positive direction. The final month of the year saw, on a seasonally adjusted monthly basis, sales actually increase compared to November. The average selling price also edged up on a seasonally adjusted basis, although the MLS Home Price Index Composite did edge lower.
TRREB notes that record-high immigration levels helped to buoy the housing market, even as most of that demand was directed towards rentals. TRREB CEO John DiMichele highlighted the immediate need for more housing stock to both house immigrants and keep the market in balance.
“Record immigration into the GTA in the coming years will require a corresponding increase in the number of homes available to rent or purchase,” DiMichele said. “People need to have comfort in knowing that they can plan their lives and future with the certainty that they will have the stability of an affordable place to live.”