Market Report | October 2023
Market Report | October 2023
Toronto's Real Estate Market Shows Price Resilience Amid Sales Slowdown in October 2023
TORONTO, ONTARIO, October 4, 2023 – The impact of high borrowing costs, high inflation, uncertainty surrounding future Bank of Canada decisions and slower economic growth continued to weigh on Greater Toronto Area (GTA) home sales in September. However, despite the market being better-supplied with listings, the average selling price was up year-over-year.
“The short and medium-term outlooks for the GTA housing market are very different. In the short term, the consensus view is that borrowing costs will remain elevated until mid-2024, after which they will start to trend lower. This suggests that we should start to see a marked uptick in demand for ownership housing in the second half of next year, as lower rates and record population growth spur an increase in buyers,” said TRREB President Paul Baron.
Greater Toronto Area - Monthly Sales Activity
REALTORS® reported 4,642 home sales through TRREB’s MLS® System in September 2023 – down 7.1 per cent compared to September 2022. The year-over-year dip in sales was more pronounced for ground-oriented homes, particularly semi-detached houses and townhouses. On a month-over-month seasonally-adjusted basis, sales were also down slightly.
New listings were up strongly on a year-over-year basis from the extremely low level in September 2022. The number of listings also trended upward on a month-over-month seasonally adjusted basis.
The MLS® Home Price Index (HPI) Composite benchmark was up by 2.4 per cent year-over-year. The average selling price was up by three per cent over the same time period. On a month-over-month seasonally-adjusted basis, both the average selling price and the MLS® HPI Composite benchmark edged lower by less than one per cent.
“GTA home selling prices remain above the trough experienced early in the first quarter of 2023. However, we did experience more balanced market in the summer and early fall, with listings increasing noticeably relative to sales. This suggests that some buyers may benefit from more negotiating power, at least in the short term. This could help offset the impact of high borrowing costs,” said TRREB Chief Market Analyst Jason Mercer.
“TRREB’s annual consumer polling has shown that half of intending home buyers in Toronto will be firsttime buyers in any given year. The average price of a condo apartment in Toronto is over $700,000. Yet, the first-time buyer exemption threshold for the City’s upfront land transfer tax has remained at $400,000 for a decade-and-a-half. With this in mind, TRREB applauds Toronto City Council for asking City staff to provide a report on a more appropriate exemption level moving forward,” said TRREB CEO John DiMichele. He further stressed that “many housing and taxation policies are currently set in opposition and we need all levels of government to align policies and work together to solve this housing crisis.”
City of Toronto - Active Listings
City of Toronto Monthly Sales
Key Highlights from the report
GTA home sales experienced downward pressure in September due to high borrowing costs, elevated inflation, uncertainty over the Bank of Canada's upcoming decisions, and decelerated economic growth.
In spite of increased listings availability, the average selling price rose year-over-year.
Forecasts suggest borrowing costs will stay high until mid-2024, with expectations of a surge in demand for homes in the latter half of 2024 driven by declining rates and record population growth.
Home sales recorded by REALTORS® through TRREB's MLS® System in September stood at 4,642, marking a 7.1% drop from September 2022. Ground-oriented homes, notably semi-detached houses and townhouses, saw the most significant sales decline.
Listings observed a substantial year-over-year growth, particularly when compared to the notably low levels from September 2022.
The MLS® Home Price Index (HPI) Composite benchmark increased by 2.4% year-over-year, while the average selling price rose by 3%. Both figures witnessed a slight decline of less than one percent on a month-over-month seasonally-adjusted basis.
Despite high borrowing costs, increased listings relative to sales indicate a more balanced market and potential for enhanced buyer negotiation power in the near term.
TRREB's polling data reveals 50% of potential homebuyers in Toronto are first-timers. Given the current average condo price exceeding $700,000 and the stagnant land transfer tax exemption at $400,000 for over 15 years, TRREB commends the Toronto City Council for seeking a review on a revised exemption threshold.
TRREB CEO John DiMichele emphasizes the necessity for cohesive policies across government tiers to address the ongoing housing crisis.
Report summary
In September 2023, the Greater Toronto Area (GTA) saw a decline in home sales, primarily due to high borrowing costs and economic uncertainties. However, despite a larger supply of listings, the average selling price of homes increased from the previous year. This surge in prices, combined with high borrowing rates, suggests a challenging environment for potential homebuyers. Notably, while first-time buyers constitute half of the potential homebuyers in Toronto, the current average condo price is over $700,000, yet the land transfer tax exemption for them has remained at $400,000 for over 15 years, highlighting a significant affordability concern.
