Market Report | September 2023
Market Report | October 2023
TRREB: HIGH INTEREST RATES IMPACTING THE MARKET, BUT POPULATION GROWTH WILL SOON SPUR DEMAND
Lack of affordability and uncertainty remained issues for many would-be home buyers in the Greater Toronto Area (GTA) in October 2023. As a result, sales edged lower compared to last year. However, selling prices remained higher than last year’s levels.
“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong. However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be home buyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly,” said TRREB President Paul Baron.
Greater Toronto Area - Monthly Sales Activity
REALTORS® reported 4,646 GTA home sales through TRREB’s MLS® System in October 2023 – down 5.8 per cent compared to October 2022. On a month-over-month seasonally-adjusted basis, sales were also down in comparison to September.
New listings in October 2023 were up noticeably compared to the 12-year low reported in October 2022, but up more modestly compared to the 10-year average for October. New listings, on a seasonally-adjusted basis, edged slightly lower month-over-month compared to September 2023.
The October 2023 MLS® Home Price Index Composite benchmark and the average selling price were both up on year-over-year basis, by 1.4 per cent and 3.5 per cent respectively. On a seasonally adjusted basis, the MLS® HPI Composite benchmark edged lower compared to September 2023 while the average selling price remained at a similar level. Both the MLS® HPI Composite benchmark and average price remained above the cyclical lows experienced at the beginning of 2023.
City of Toronto - Active Listings
City of Toronto Monthly Sales
“Competition between buyers remained strong enough to keep the average selling price above last year’s level in October and above the cyclical lows experienced in the first quarter of this year. The Bank of Canada also noted this resilience in its October statement. However, home prices remain well-below their record peak reached at the beginning of 2022, so lower home prices have mitigated the impact of higher borrowing costs to a certain degree,” said TRREB Chief Market Analyst Jason Mercer.
“In the current environment of extremely high borrowing costs, it is disappointing to see that there has been no relief for uninsured mortgage holders reaching the end of their current term. If these borrowers want to shop around for a more competitive rate, they are still forced to unrealistically qualify at rates approaching eight per cent. Following their most recent round of consultations, the Office of the Superintendent of Financial Institutions should have eliminated this qualification rule for those renewing their mortgages with a different institution,” said TRREB CEO John DiMichele
York Region - Active Listings
York Region - Monthly Sales
Our thoughts on the October Market
The Greater Toronto Area (GTA) real estate market in October 2023 reflects a dichotomy characterized by enduring price resilience amid a softening in sales volume, indicative of the complex interplay between economic factors and housing demand. The persistent affordability challenges and interest rate uncertainties are discernible headwinds, tempering the enthusiasm of prospective homebuyers, with a noted shift in focus towards the rental segment as a holding strategy.
Despite a contraction in sales by 5.8% year-over-year and a sequential monthly dip, selling prices have not succumbed to downward pressures, underscoring a market that remains steadfast, buoyed by a potent mix of demographic growth and a relatively stable local economy. TRREB President Paul Baron’s comments suggest an undercurrent of pent-up demand which is poised to re-enter the market upon the moderation of mortgage rates, signaling a latent rebound potential.
The market's dynamics are further complicated by the influx of new listings, which, while significantly higher than the previous year's nadir, present a modest uplift when benchmarked against a decadal average. This nuanced increment, alongside a slight month-to-month seasonal adjustment, underscores a cautious seller sentiment and a market in search of equilibrium.
Year-over-year increases in the MLS® Home Price Index Composite benchmark and average selling prices by 1.4% and 3.5% respectively, juxtaposed with a marginal seasonal decline, exhibit an underlying price stability that belies the sales volume softening. TRREB Chief Market Analyst Jason Mercer's commentary on the competitive nature of the buying landscape and the Bank of Canada's acknowledgment of market resilience suggest a foundational robustness in price levels.
However, the narrative extends beyond market dynamics into the realm of regulatory policies impacting borrowers. TRREB CEO John DiMichele's critique of the stringent qualification rules for uninsured mortgage holders, which inhibit rate shopping and competitive financing, reflects broader concerns over policy frameworks that may not be fully attuned to the realities faced by homeowners in a high-interest rate environment.
In essence, the October 2023 snapshot of the GTA housing market is not merely a tale of numbers but a story of an adapting market, resilience in valuation, and the need for responsive policy interventions to ease the path forward for would-be homebuyers navigating an intricate economic landscape.
