Buyers are returning to the Toronto housing market as prices begin to climb after a sluggish period.
A Reemerging Competition
The Toronto Regional Real Estate Board (TRREB) has reported a resurgence of competition among buyers, indicating a shifting market landscape. For the first time since May 2022, the average home price in the area has exceeded the average list price. In March, the average price of a home reached $1,108,606, up from $1,096,519 the previous month. Although this is still a 15% decrease compared to last March's frenzied market, it signals a potential tightening of the market after months of sluggish sales and price drops.
Realtors and industry experts view this shift as a positive sign, suggesting that the Toronto housing market is regaining its momentum. Nasma Ali, the broker and founder of the One Group, part of Real Brokerage, noted an increase in buyer activity and competition for listings. Ali emphasized that last year's market was stagnant, but the current market dynamic is vastly different.
Potential buyers are regaining confidence in the Toronto housing market.
Regaining Buyer Confidence
These recent developments indicate that prospective homebuyers are gaining confidence despite rising borrowing costs due to increased interest rates. The Bank of Canada has raised interest rates eight times in less than a year, leading to initial concerns among buyers. However, the fear of missing out on opportunities and returning to a highly competitive market has motivated buyers to act.
Buyers are now approaching the market with more caution and conservatism. Despite multiple offers becoming more common, they tend to bid under the asking price. This approach has resulted in prices still being considerably lower than the 2022 peak. For example, detached homes have an average price of $1,468,651, down 13.5% from a year ago.
Sales activity in March remained subdued.
Subdued Sales Activity
While the increase in buyer activity is promising, sellers have been more hesitant to return to the market. Many potential sellers are waiting for prices to rise further before listing their homes, hoping to match or exceed the peak prices of last year. As a result, new listings in March numbered 11,184, down 44% compared to the prior year.
The Toronto market's sales activity in March was considered "subdued" by Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets. However, Thiagamoorthy noted that market conditions have been steadily tightening, suggesting a bottoming process. With the Bank of Canada keeping interest rates steady, more buyers are expected to enter the market, contributing to potential sales gains.
The outlook for the Toronto housing market shows signs of improvement.
Outlook for the Future
Rishi Sondhi, an economist at TD Economics, believes that Canadian home sales have reached a trough and anticipates quarterly sales gains, especially in Ontario and British Columbia. However, Sondhi also predicts that 2023 will likely be the softest sales year since the early 2000s in both provinces.
While the Toronto housing market is showing signs of improvement, it is important to approach these developments with a cautious outlook. As the market continues to evolve, potential buyers and sellers should stay informed and carefully consider their options.
In summary, the return of competition among buyers and the slight increase in prices indicate a shift in the Toronto housing market. Prospective homebuyers are gaining confidence and entering the market cautiously, leading to a moderate increase in sales activity. However, sellers are still holding off on listing their properties, resulting in a decrease in new listings. As experts forecast sales gains in the near future, the Toronto housing market may present new opportunities for both buyers and sellers alike.