Toronto’s November real estate market continued to be sluggish. Prices dropped across the different market segments as anticipation of a seventh interest rate increase in 2022 came to fruition last week. Total transactions in Toronto fell by 50% compared to a year ago. This trend is concerning as highlighted in last month’s newsletter when we showed Toronto’s 2022 second half transactions are the lowest in a decade despite Toronto’s population increasing by 7% over the same period.
Movement has stalled as buyers with properties won’t upsize or downsize until they’ve sold their property. These would-be buyers often list their property but may not end up selling as they hold the line on price having not already purchased. First time home buyers believe that prices can drop further in the face of higher interest rates. The end result is a stagnant market.
There may be some light at the end of the tunnel as prices in some markets have dropped enough to offset the interest rate increases. Overall prices in Toronto dropped ~15% since the beginning of the year, with detached properties experiencing the biggest decline of ~25% compared to condo apartments that shed ~12% off peak prices. From an affordability perspective, these unequal rates of market decline in conjunction with increased mortgage rates results in differing perspectives for buyers looking to enter these 2 market segments.
The condo apartment buyer currently in the market requires more income to buy the average Toronto condo than the buyer who purchased earlier this year when prices were at their highest. The following table shows that the average Toronto condo buyer needs $14k more income in November 2022 compared to the buyer for the same condo in February 2022.
Conversely, the following table outlines that a buyer looking to buy the average detached property in November 2022 requires $13K less income than a buyer in February 2022 due to the significantly lower prices amidst higher interest rates.
This analysis shows that the detached market has become more affordable since the beginning of the year while condo apartments have become less affordable. Even though $13,000 represents only ~5% of the required income, at least properties are becoming more affordable in the detached property market.
With no easing of interest rates in sight, I’m not sure what events will transpire to act as prunes and bran for this constipated market.
Shen Shoots the Breeze
Two Decembers ago, I shared about Tabitha House – a transitional home for young women located in Toronto’s east end. Thanks to those of you who donated time and money towards this home; and also to those who have been inquiring on its progress.
Here’s a brief update: Tabitha House just celebrated its 2-year birthday. The staff at LOFT Community Services have been instrumental in assisting these women land on their feet. So far, we served 7 women. In addition, 2 of these women are doing well with school – one has graduated and is looking for work in her field, and the other found a full-time job while attending college. We also received good news that Tabitha House has been fully funded into late next year.
We hope to reconnect with the women and staff as volunteer engagement had fits and starts with multiple pandemic lockdowns since opening in 2020. We hope to find regular volunteers to help with minor repair and renovations and in Spring, people to help with gardening. Meeting up to cook and eat together is something the women have also expressed keen interest. If you’re interested in volunteering, please message me.
Loft is always looking for non-perishable pantry items (spices, canned goods, pasta, rice), personal care products (bath, body and feminine hygiene) along with linens (double and twin sized) and towels. We aim to provide the women with new sheets and towels whenever a new person moves in.
If you have any of the above items or are looking for an organization to donate, we are always accepting funds towards the running of Tabitha House. Select Tabitha House under Designated Programs.
God has been so faithful in providing people, funds and expertise in keeping this home running for the past 2 years. Our hope is that this home would serve even more women for many years to come.