Market Report | January 2023
Market report
the GTA real estate market review from JANUARY 2023
The Greater Toronto Area (GTA) housing market in 2023 has followed the expected trend, with the number of sales and average selling price remaining steady from December 2022. However, both sales and prices have significantly dropped from the previous year, demonstrating the impact of higher borrowing costs on affordability. In this analysis, we will examine the state of the Toronto real estate market and highlight the limited number of residential properties on the market, its impact on housing prices, and how this trend is expected to continue in the future.
Market Trends
According to the Toronto Regional Real Estate Board (TRREB), the number of sales reported through the MLS® System in January 2023 was 3,100, similar to the result reported in December 2022, but down by 44.6% compared to the same period last year. The average selling price for January 2023 was $1,038,668, which is slightly lower than the December 2022 result and down by 16.4% compared to January 2022's average price, which was reported before the onset of Bank of Canada interest rate hikes.
TRREB President Paul Baron stated that home sales and selling prices have found some support in recent months, and this, coupled with the Bank of Canada's announcement that interest rate hikes are likely on hold for the foreseeable future, is expected to encourage some buyers to move off the sidelines in the coming months. Moreover, tight labor market conditions and record population growth will continue to support housing demand moving forward.
2020 - 2023 Sales Comparison
Limited Residential Properties
One of the significant trends that has impacted the Toronto real estate market is the limited number of residential properties on the market. As a result, the demand for housing has increased, leading to increased housing prices. According to TRREB Chief Market Analyst Jason Mercer, homebuyers sought to mitigate the impact of substantially higher borrowing costs, and this led to a decline in home prices over the past year. Although short-term borrowing costs increased again in January, medium-term mortgage rates, like the five-year fixed rate, have started to trend lower compared to the end of last year, leading to increased affordability.
However, the trend of limited residential properties is expected to continue, as Toronto continues to experience record population growth and a tight labor market. As a result, this trend is expected to put upward pressure on housing prices, which could create challenges for homebuyers seeking to enter the market.
Average Price on the MLS
Sales Activity Comparison
Investment Opportunities
Despite the challenges in the Toronto real estate market, there are still opportunities for investment. Given the limited number of residential properties on the market, investors who are able to identify undervalued properties and negotiate favorable terms could benefit from increased demand for housing. Additionally, the trend of declining borrowing costs, coupled with the Bank of Canada's announcement that interest rate hikes are likely on hold for the foreseeable future, could create opportunities for real estate investors to access affordable financing and grow their portfolios.
Conclusion
The Toronto real estate market is following an expected trend, with sales and average selling prices remaining steady from December 2022. The limited number of residential properties on the market is a significant trend that is expected to continue, leading to increased upward pressure on housing prices. However, the trend of declining borrowing costs and the Bank of Canada's announcement that interest rate hikes are likely on hold for the foreseeable future could create opportunities for real estate investors seeking to grow their portfolios. Overall, investors in the Toronto real estate market will need to carefully analyze market trends, identify opportunities for investment, and remain flexible in their investment strategies to succeed in this challenging market.
We'd like to invite you to take a look at our complete market report for January 2023. It's full of valuable insights and analysis that can help you gain a better understanding of the current state of the market. We believe that you'll find the report informative and engaging, and we look forward to sharing it with you.
