Market Report | December 2023
Market Report | December 2023
While the overall demand for housing remained buoyed by record immigration in 2023, more of this demand was pointed at the rental market. The number of Greater Toronto Area (GTA) home sales in 2023 came in at less than 70,000 due to affordability issues brought about by high mortgage rates.
“High borrowing costs coupled with unrealistic federal mortgage qualification standards resulted in an unaffordable home ownership market for many households in 2023. 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,” said new Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.
There were 65,982 home sales reported through TRREB’s MLS® System in 2023 – a 12.1 per cent dip compared to 2022. Despite an uptick during the spring and summer, the number of new listings also declined in 2023. The trend for listings has been largely flat-to-down over the past decade, which is problematic in the face of a steadily growing population. On a seasonally adjusted monthly basis, sales increased compared to November, while new listings declined for the third straight month.
Greater Toronto Area - Monthly Sales Activity
The average selling price for all home types in 2023 was $1,126,604, representing a 5.4 per cent decline compared to 2022. On a seasonally adjusted monthly basis, the average selling price edged higher, while the MLS® Home Price Index Composite edged lower.
“Buyers who were active in the 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. Assuming borrowing costs trend lower this year, look for tighter market conditions to prompt renewed price growth in the months ahead,” said TRREB Chief Market Analyst Jason Mercer.
“Record immigration into the GTA in the coming years will require a corresponding increase in the number of homes available to rent or purchase. 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,” said TRREB CEO John DiMichele.
City of Toronto - Active Listings
City of Toronto Monthly Sales
Summary
In 2023, the Greater Toronto Area (GTA) real estate market navigated through a phase of recalibration, influenced by a blend of high borrowing costs and stringent mortgage regulations. Despite a buoyant demand driven by record immigration, the market's tilt was more towards rentals than home ownership. As we usher in 2024, early indicators suggest a potential resurgence in home sales, contingent on anticipated easing of borrowing costs and a resilient economy.
Market Dynamics
The GTA's housing market witnessed a notable contraction in home sales in 2023, with total transactions falling below 70,000. This downturn, amounting to a 12.1% decrease compared to 2022, is primarily attributed to affordability challenges exacerbated by elevated mortgage rates.
York Region - Active Listings
York Region - Monthly Sales
Average Selling Price
The average selling price across all home types stood at $1,126,604 in 2023, a 5.4% decline from 2022. This price adjustment reflects the market's response to higher borrowing costs and evolving buyer preferences. However, a subtle month-on-month increase in the average selling price, alongside a slight dip in the MLS® Home Price Index Composite, indicates a nuanced market behavior.
Market Outlook and Analysis
Jennifer Pearce, President of TRREB, projects a hopeful outlook for 2024, anticipating a relief in borrowing costs which could rejuvenate home sales. This sentiment is echoed by TRREB Chief Market Analyst Jason Mercer, who highlights the benefits reaped by active buyers in 2023, including greater negotiating leverage and reduced selling prices. A potential downward trend in borrowing costs could lead to tighter market conditions and renewed price growth.
The GTA real estate market in 2023 was a testament to the resilience and adaptability of stakeholders amidst challenging economic conditions. As we move forward, a balanced approach, coupled with responsive policy measures and market foresight, will be crucial in navigating the evolving landscape of the real estate sector in the GTA.
