Toronto’s January real estate market started with a whimper. Sales transactions were down signifcantly across all housing types as the central bank increased interest rates for the eighth time since the beginning of 2022. Toronto’s average property price dipped under $1M for the first time since February 2021 as freehold prices declined by over 20% compared to January 2022.
Despite the gloom in January, based on activity over the past few weeks I feel that market sentiment is improving. The fear of recession has been dampened by strong job creation in Canada and the US. The central bank signaled that it will not increase interest rates in the near term and expects inflation to subside in the second half of the year. The federal government’s favourable immigration policy will increase demand in GTA for all types of housing. The new normal of 5%-6% interest rates may be acceptable for buyers who went on the sidelines in 2022 and are keen to move now that prices have dropped across all property types.
I attended last Friday’s real estate board’s annual year in review and market outlook where many of these themes were confirmed. Some of the key residential highlights include:
- 2023 GTA Price outlook will decrease by 4% to $1,140,000 as the market becomes accustomed to higher interest rates
- 2023 GTA Sales outlook will decrease by 7% to 70,000 due to the weak handoff from 2022.
- High rental demand and double digit rent increases to continue due to immigration and tight supply.
Aside from the market forecasts, other key note speakers discussed: innovating to solve major problems in real estate and housing; how the emergence of electric vehicles will impact real estate, whether there is sufficient transit capacity to serve communities in the Greater Golden Horseshoe. The report covers buyer and seller intentions, commercial, new home analysis and much more. The full report can be found here.