The October 2022 market report has seen a continued transition to a higher borrowing cost environment as demand continues to be weak. However, the average home price in the GTA has found some support near $1.1 million since early summer. A persistent lack of inventory explains why the downward trend in home prices experienced in the spring, has flattened out over the past few months.
Prices are leveling off
Prices have leveled off since the middle of August, as you can see in the chart below. While demand has fallen off a cliff since the beginning of spring when the Bank of Canada started raising rates to curb inflation, a lack of supply is the cause that home prices have leveled off in the past few months. New listings are at historic lows for this time of the year and “even a slight uptick in demand could cause the market to shift to a seller’s market” – as per TRREB Presiden Kevin Crigger.
Prices have leveled off since the middle of August, as you can see in the chart below in the link below. Demand has fallen off a cliff since the beginning of spring when the Bank of Canada started raising rates to curb inflation, but a lack of supply is the cause that home prices have leveled off in the past few months. New listings are at historic lows for this time of the year and “even a slight uptick in demand could cause the market to shift to a seller’s market” – as per TRREB Presiden Kevin Crigger.
Is this a “PIVOT” to a seller’s market again – as many realtors on social media and in the news continue to talk about? While I don’t get into predictions, I will share my observations. As we’re going into a traditionally slow season for real estate I expect a few things to happen. Continued low amount of transactions and low inventory. The Bank of Canada is expected to resume raising rates in the near term. They will eventually stop but not yet. Despite the average prices falling by about 20% in the GTA since the peak, buying a property is not more affordable today than it was in February due to the increase in interest rates. That and the uncertainty about a looming recession are the main causes for the low demand and there are no indications that that will change by the end of the year. What happens beyond that is anyone’s guess.
The overall decline of average prices since the peak in February:
| Toronto | Peel | York | Durham | Halton | Simcoe | |
| Percentage change | -$117,182 | -$280,372 | -$327,847 | -$335,503 | -$307,707 | -$341,701 |
| Price change in $ | -10% | -21% | -21% | -27% | -20% | -28% |
Condo apartments
While the condo apartment market has fared better than the low-rise segment since the peak in the spring, sales activity is very low while inventory has stopped rising and has remained fairly steady for the past few months. That has equated to a balanced to a slight buyer’s market in Toronto and most of the GTA with no significant upward or downward pressure on prices.
Low-rise segment (detached, semis & townhouses)
As I’ve been saying for months now, the gap between condos and freehold properties has been drastically narrowing and it looks like the market has caught on. I’ve seen a slight uptick in sales for detached properties since the summer. That combined with a decline in inventory levels has caused a tightening in the low-rise segment and there is no further downward pressure on prices in this segment for the time being. This is especially true for semi-detached and townhouse properties as the lower price point has a bigger pool of buyers that are able to afford it.
Would you like to know what’s happening with home prices in your area? Check below
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You might also like these recent posts
- What to expect if you are buying or selling in the fall of 2022
- Opportunities in a falling real estate market
In the news
- With record Canadian immigration targets, housing fears soar, but anxieties are unfounded, experts say – Courtesy of CBC
- Canadians are “very sensitive” to higher rates: Benjamin Tal – Courtesy of BNN Bloomberg
- Quiet fall housing market across Canada – Courtesy of RBC
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