The GTA market experienced the worst September sales since 2006.
Several factors have been influencing the GTA home sales decline. High borrowing costs and inflation, the looming uncertainty over future decisions by the Bank of Canada, and a slowed economic growth have collectively weighed down the sales in September.
The GTA market saw a significant dip in September. Sales were at their weakest since 2006, a trend visually evident from the increase in new listings and active inventory. In comparison to September 2022, there’s been a 44% increase in new listings (which was already historically low!) and a 7.1% decrease in home sales.
Months of Inventory hasn’t been this weak since 2009!
Months of inventory tells us the current pace of the market. The higher the months of inventory, the slower the market, the more favourable the market is for buyers. For the first time 14 years, the GTA real estate market is now in a Buyer’s market. Buyers have many homes to choose from with little competition from other buyers. On the ground level, I have noticed many listings sitting with longer days on market while some listings are still getting multiple offers. Very few and far between. The nicest and best priced homes are getting multiple offers but homes that aren’t priced correctly, aren’t selling.
Despite these factors, and in the face of an increased number of listings, the selling prices have seen an upward increase. Average selling price showed a 3% year-over-year increase, and 3.4% increase month-over-month despite challenges like high borrowing costs and inflation. The MLS® Home Price Index (HPI) Composite benchmark increased by 2.4% year-over-year.
A Glimpse into the Future
TRREB President, Paul Baron, sheds light on the varying outlooks for the GTA housing market. The short-term prognosis is influenced by elevated borrowing costs projected to last till mid-2024.
However, this could change in the latter half of 2024, when borrowing costs are expected to decrease. Coupled with record population growth, the demand for ownership housing might see a significant increase.
First-Time Home Buyers’ Plight
The last note of concern comes from the findings that highlight the struggles of first-time home buyers in Toronto. Despite half of the intending home buyers being first-timers, the price of condo apartments in Toronto exceeds $700,000. This is almost double the exemption threshold for the City’s upfront land transfer tax, which has been stagnant at $400,000 for the past 15 years.
Acknowledging this disparity, TRREB’s CEO, John DiMichele, appreciates the Toronto City Council’s efforts in revisiting the exemption level. He further emphasized the need for synchronized policies across all governmental tiers to effectively address the housing crisis.
Market Outlook
The current trends suggest a short-term buyer’s advantage in negotiations, potentially countering the brunt of high borrowing costs.
The market trends, influenced by various factors including government policies and population growth, remain a crucial area to watch. Buyers and sellers need to be agile, well-informed, and proactive in their strategies to navigate these changes effectively.
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