Impressive Rally in the GTA Housing Market Continues in May, Highlighting Strong Resilience & Widespread Recovery

In May, the housing market in the Greater Toronto Area (GTA) continued its upward trajectory, displaying an impressive rally in home prices. The average price surged by $42,832, marking the second consecutive month of substantial gains exceeding $40,000. This surge is particularly noteworthy when compared to the market bottom observed in January, where properties were selling at an average of $1,038,668. Since then, home values have experienced a commendable recovery, reclaiming $157,433 of the previously incurred losses.

The resilience of the GTA housing market is undeniably apparent, with an extraordinary rebound that has recouped 53% of the losses incurred during an 11-month period marked by eight consecutive interest rate increases. Remarkably, this substantial recovery has materialized in just four months, reflecting the market's exceptional resilience and adaptability. 

The recovery rally in 2023 has been widespread, with all major asset classes across the GTA participating. Leading the recovery march is the Semi-Detached segment, which has recouped over $188,000 or 54% since the market bottom, bringing the average sales price in May to $1,198,185. The Townhouse and Condo markets have also made significant strides, recovering over 50% of their losses, with price increases of $163,384 and $60,787, respectively. Consequently, the average sales prices for Townhouses and Condos during May stood at $1,117,696 and $748,483. The Detached market, although lagging in comparison, has still achieved an impressive recovery of 47%, amounting to $214,718, resulting in an average sales price of $1,556,566. This rapid recovery and market strength have sparked anticipation among investors, as highlighted in the 2023 Royal LePage Investors Report.

In the Royal LePage survey conducted by Leger, 23% of Canadians who do not own a residential investment property say that they are likely to purchase one in the next five years, and more than half (51%) of current investors say that they are likely to purchase an additional residential investment property within the same time period. Overall, 26% of all Canadians, current investors or otherwise, plan to buy an investment property before 2028.

“We know that the value of home ownership is strong among Canadians – it is clear that possessing real estate remains a desirable means for building wealth over time. Many choose to invest in real estate not only as a way of generating income and reaping the benefits of value appreciation, but to provide an opening into the market for future generations of their family, ” said Phil Soper, president and CEO, Royal LePage. “Despite the hurdles of low home supply and increased lending rates, young people are more inclined than ever to make real estate investing a part of their financial planning for the future. In fact, survey results tell us that many of them are actually prioritizing an investment property over owning their primary residence.”

The persistently low inventory levels continue to exert upward pressure on sale prices, resulting from historically low levels of homes for sale across the overall market. In May, there were only 11,868 active properties, representing a 31% decrease compared to the average of the preceding 10 years. 

Despite the limited inventory, sales have shown improvement across all segments. In May, there were 9,012 sales, a rise of 1,418 compared to the previous month. Considering the 31% decrease in inventory levels compared to historical norms, one might expect a similar decline in sales. However, the data presents a contrary picture, with sales only down 8% from historical levels. Notably, the Condo market led the way in May, with 2,568 sales, representing an increase of 408 from the previous month and more than a 10% rise compared to the average of the preceding 10 years. The Detached market experienced the largest monthly increase, with 4,049 sales, surpassing April's figures by over 601 properties but is still down 15% from historical levels. Both the Semi-Detached and Townhouse markets also demonstrated solid growth, with 787 and 824 sales, respectively, reflecting increases of 157 and 183 compared to the previous month.

“The demand for ownership housing has picked up markedly in recent months. Many homebuyers have recalibrated their housing needs in the face of higher borrowing costs and are moving back into the market. In addition, strong rent growth and record population growth on the back of immigration has also supported increased home sales. The supply of listings hasn't kept up with sales, so we have seen upward pressure on selling prices during the spring,” said TRREB Chief Market Analyst Jason Mercer. 

Overall, May was another favourable month for sellers, characterized by increasing home sale prices and escalating competition, resulting in properties selling for 105% of the asking price—the highest level since April 2022. While sellers rejoice as the market rallies, potential buyers may have concerns. Negative headlines emerged in May, such as the increase in April's inflation rate to 4.4%. If inflation persists, the Bank of Canada could be compelled to implement another interest rate hike, which may moderate the rapid pace of property value increases. However, it is unlikely that move would address the core issue of limited inventory, which remains the primary factor behind price increases. 

MAY 2023 MARKET STATS SUMMARY

MARKET STATS BY CITY/TOWNS

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Rising Mortgage Costs Impact Rental Markets

Many renters in some of Canada’s biggest cities have already been paying record-high amounts to their landlords as of late, but a new report suggests pressure facing real estate investors might ratchet up the pain in the rental market in the coming years.

The report, released Monday (May 29/23) from CIBC and Urbanation, shows that for a majority of real estate investors in the Greater Toronto Area (GTA), the business case for their rental properties is falling apart. Industry observers say similar pressures are being felt in other major cities like Vancouver.

While tenants might have little sympathy for the landlords who, in many cases, have been rapidly raising their monthly rents in recent months, experts who spoke to Global News say investors are critical to the supply of units in the rental market.

With investor demand for new builds potentially dampening, renters could face even steeper costs in the year ahead, says Urbanation’s Shaun Hildebrand, one of the authors of this week’s report.

Urbanation and CIBC found that, for the first time since it undertook the annual study in 2017, the majority of investors (52 per cent) in the GTA were cash flow negative for their properties in 2022.

What that means is that the income generated by rents didn’t cover off the owner’s mortgage, property taxes and condo fees, and the investor likely loses money on a month-to-month basis.

Hildebrand says while Urbanation’s formal probe into these questions only began in 2017, last year was likely the first time in the “modern era” of condo investing over the past two decades or so that most investors started to see negative cash flows.

He tells Global News there was one fundamental shift in the market that led most investors to swing to a loss: the Bank of Canada’s rapid rise in interest rates, which has seen borrowing costs soar for many mortgage holders.

A Royal LePage survey published last week showed that nearly one in three investors are considering selling off a property amid higher interest rates.

While 2022 marked a tough year for Toronto’s investors, Hildebrand expects 2023 has been even worse so far.

Investors typically agree to purchase property at market prices when they buy and pay that price a few years later when the unit is completed. The hope is that property values rise over the course of the construction period, and that an investor ends up paying below market value and renting the unit at today’s rates, netting them a solid cash flow.

But with a steady housing correction over the past year and rising interest rates, and investors taking out mortgages today on properties they agreed to buy at the market’s peak, Hildebrand says the business case is much harder to square.

At this point, most renters might be calling foul, as rent prices have surged across Canada in recent years at the same time as landlords adjust to higher interest rates.

Rentals.ca data for April showed average rents in Canada were just over $2,000 monthly last month, up nearly 10 per cent year over year and 20 per cent from the pandemic low in April 2021. Ontario saw the steepest annual rent inflation last month, up 16.7 per cent year over year to an average of $2,421; British Columbia’s increase was the lowest for any province at 5.6 per cent.

While Hildebrand acknowledges rents have risen quickly to offset the pain facing landlords with variable-rate mortgages or those renewing their fixed terms, it simply hasn’t been enough to sustain the business model for most, he says.

“Even with rents reaching all-time highs and then rising extremely quickly over the last couple of years, unfortunately it hasn’t been enough to offset those ownership costs,” he says.

Why are investors so important for the rental market?

Investors being confident that they can profit off of their properties isn’t just a concern for them — it matters for the health of the rental markets in Canada’s biggest cities, experts say.

Rental investors account for nearly three of every five condo units built in Toronto from 2016 to 2020, up 20 percentage points from a decade earlier, according to Statistics Canada. For Vancouver, the rental investors account for almost half of all condo builds with a similar increase over the timeframes.

The Urbanation-CIBC report says investors are crucial for Toronto’s rental supply, with a lack of purpose-built rentals to accommodate renters in the GTA.

“Investor demand is therefore of critical importance for the supply outlook – if investors aren’t buying, developers aren’t building,” the report reads.

Hildebrand says that if investors are turned off from the pre-construction market as their cash flows worsen, they might be less keen to put money down on new builds or could sell off their existing properties.

Most investors buy pre-construction rather than from the resale market, according to Urbanation, meaning if an investor sells, that property is likely going to enter the ownership market.

While that might be welcome news for buyers struggling to break into Toronto’s expensive housing market, Hildebrand doesn’t think there will be a flood of investor properties up for grabs that would meaningfully boost supply and lower prices in the city.

“The bigger issue that it will have is an increase in rents because there’s going to be a restriction in the amount of supply. And unfortunately this is going to cause further affordability issues for renters,” he says.

It’s not just a problem in Toronto, either. Andy Yan, director of the city program at B.C.’s Simon Fraser University, says Vancouver landlords are “very much so” facing similar pressures to their Toronto counterparts.

The “secondary market,” which Yan says includes condos and other units rented out in an owner’s home, now makes up the bulk of Vancouver rentals as well.

Both Yan and Hildebrand say there are not enough purpose-built rental apartments in the construction pipeline to offset a possible drop in investor-driven activity.

“Purpose-built for rental housing hasn’t necessarily caught up with the demand for rental housing across the country,” Yan says.

“There is now profound pressure in our rental market.”

Immigration a constant pressure on the rental market

Thomas Davidoff, real estate economics professor at the University of British Columbia’s Sauder School of Business, tells Global News that while the business case for investors has worsened in recent years, in the long run, it has been and should continue to be strong.

Constrained housing supply in both the rental and ownership markets of Vancouver has kept upward pressure on rents, Davidoff says. Those who have been able to hold on to their properties in the long term, as property values and rents rise, are likely making “fantastic returns,” he says.

Tenants who are unable to keep pace with higher borrowing costs in Canada’s most expensive markets are therefore likely to be stuck in the increasingly crowded rental market, Davidoff says, which is expected to keep ratcheting up the pressure on rents and improving the business case for investors.

“That means you’ve got affluent people who’d like to get into the ownership market unable to do so and are put into the rental pool, which is lousy for the people competing with them,” Davidoff says. “But great for landlords.”

As investors’ business models deteriorate in the short term, however, experts such as Yan and Hildebrand say there will be a reckoning for renters.

Yan says much of the pressure is going to come from Ottawa’s lofty immigration targets. Canada welcomed a record number newcomers in 2022, with urban centres acting as major immigration hubs for the country.

Yan says newcomers are more likely to rent than own when they first arrive in Canada and are set to face “tremendous challenges” between rental rates in the cores of big cities or transportation costs to commute to their jobs from further afield.

Immigrants come to Canada “to really start their Canadian dreams,” he tells Global News.

“And the fact of the matter is we’re exposing now them to the Canadian housing nightmare.”

Hildebrand says there’s an “intention” from larger, institutional investors to build more rental housing in Canada, but the high interest rate environment and cost pressures in the development process are turning them off.

Governments at every level will have to take a look at where they can address the pain points, Hildebrand argues, whether it be through reducing fees, taxation, or speeding approval processes or allowing for greater density in cities to sweeten the business case in the near term.

“It’s not just individual mom-and-pop condo investors that are seeing challenging times to buy and hold rental investment. It’s the larger institutional organizations as well,” he says.

“And if they aren’t building, we’re going to end up with a significant supply gap.”

Source: Global News

Intense Competition and Limited Inventory Drive Strong Surge in GTA Real Estate Market

April 2023 Greater Toronto Area Market Stats 

The real estate market in the Greater Toronto Area is experiencing a surge in demand that is not being met by the limited inventory available. This has led to intense competition amongst buyers, resulting in properties selling quickly and often above the asking price. As a result, the average sale price of homes has increased across all market segments.

The average home sale price in April reaching an impressive $1,153,269, representing an 11% growth of $114,601 from the recent market low recorded in January.. One of the main drivers of this price surge is the remarkably low inventory levels observed so far this year, as evidenced by the total inventory of 10,373 properties in April, which is down 21% year-over-year and a striking 33% lower than the ten-year April average of 15,421 active listings.

The detached market has seen a rise in the average sales price, which increased to $1,489,258 in April, 11% or $147,410 higher than in January 2023. The low levels of inventory are particularly apparent in the detached market, with only 4,536 active listings, which is down 26% year over year and 43% from the preceding ten-year average for April data. Low inventory is driving buyers to compete over the limited properties that are available.  Numerous properties have received multiple offers, leading to a significant decline in the average days on the market, from 27 days in January to just 15 days in April. Properties sold in April were able to achieve 103% on average above the asking price, indicating the intensity of the competition.

The condo and townhouse markets have also seen average values rise to $724,118 and $1,093,560, respectively. Inventory in both markets is still very low, with only 3,944 condos and 616 townhouses available for sale in April. Nevertheless, this did not deter buyers from being active, as there were 2,160 condo sales in April, the highest sales total since April of 2022,  The condo market currently has only 1.82 months of inventory, while the townhouse market has less than 0.96 months' worth of listings available.

 As discussed in the recent Royal LePage National release, The Bank of Canada’s overnight lending rate is holding at 4.5 percent. The central bank has indicated that it will maintain the rate at its current level if inflation continues to come down.  “This was the signal that so many Canadians were waiting for. The Bank of Canada’s rate hold was the green light that stability is returning to the market, and it has had a swift and significant impact on buyer demand,” said President and CEO of Royal LePage Phil Soper. 

These thoughts are echoed by TRREB President Paul Baron, “In line with TRREB’s outlook and recent consumer polling results, we are seeing a gradual improvement in sales and average selling price. Many buyers have come to terms with higher borrowing costs and are taking advantage of lower selling prices compared to this time last year. The issue moving forward will not be the demand for ownership housing, but rather the ability to meet this demand with adequate supply. This is a policy issue that requires sustained effort from all levels of government,” said Paul.

Not only are GTA values trending higher but real estate values nationally have begun to follow suit. While price trends are currently moving upward, there are potential headwinds on the horizon if those with variable rate mortgages run into trouble keeping up with payments that in some cases have doubled over the past year. This could lead to an influx of properties entering the market, which would be a welcome development given the current low inventory levels. If this surge in listings were to materialize, it could halt the current trajectory of price increases. Without more inventory, we can expect price appreciation to continue.

MARKET STATS BY CITY/TOWNS

APRIL 2023 MARKET STATS SUMMARY

MARKET STATS BY PROPERTY TYPES

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Housing prices rise month over month for the first time in 10 months

Cost of Canadian housing could finally be tracking back up

The cost of Canadian housing could finally be tracking back up, according to the latest results from a long-running index, but the economist who prepared the report thinks it’s too early to say.

Housing prices in March increased 0.5 per cent from February, the first monthly increase for the index in 10 months, according to the Teranet-National Bank Composite House Price Index released on April 20.

The index tracks the average price of homes sold at least twice in 11 major metropolitan areas: Calgary, Edmonton, Vancouver, Victoria, Winnipeg, Halifax, Hamilton, Ottawa-Gatineau, Toronto, Montreal and Quebec City.

Daren King, an economist at National Bank of Canada who prepared the Teranet report, said most of the increase in March could be attributed to the traditionally strong nature of the spring real estate market, which is when the most houses are sold in Canada.

“It’s the big season (for real estate). That’s what explains most of it,” he said. “I think we will have to wait until after spring to assess if there is a pick up in the real estate market.”

Real estate boards have been touting monthly price and sales gains as signs of a possible revival in the sector.

Earlier this month, the Aggregate Composite MLS Home Price Index rose 0.2 per cent on a month-over-month basis in March, according to a report by the Canadian Real Estate Association (CREA) on April 14. CREA said it was the first increase since February 2022.

And prices in Toronto rose by more than one per cent in March from February, the Toronto Regional Real Estate Board said when it released data on April 5. Real estate boards for Calgary and Vancouver also reported month-over-month increases in home prices.

But once adjusted for seasonality, the Teranet-National Bank index fell 0.8 per cent in March from February.

Seasonally adjusted prices dropped in seven of the 11 cities, led by Victoria’s 4.5 per cent decline. Winnipeg dropped by 2.4 per cent, Toronto by 1.9 per cent, Edmonton by 0.9 per cent, and Hamilton, Quebec City and Ottawa-Gatineau all fell by 0.1 per cent.

The cities bucking that trend include Halifax, up by 2.3 per cent, Montreal (0.5 per cent), Vancouver (0.3 per cent) and Calgary (0.1 per cent).

Spring fever aside, King said a low number of new listings could also be affecting March pricing.

“That is definitely a factor. Probably the (seasonally adjusted) decrease would be bigger than it is right now,” he said. “For the rest of the year, the price decrease will be less than we expect.”

On a yearly basis, the Teranet index fell 6.9 per cent in March from the same time last year, “slightly worse than the previous record contraction recorded during the 2008-2009 financial crisis,” Teranet-National Bank said.

Prices fell the most in Hamilton (13.5 per cent), Toronto (12.1 per cent) and Victoria (8.7 per cent). Housing prices rose in three cities, with Calgary up 7.6 per cent, followed by Quebec City (4.1 per cent) and Edmonton (2.2 per cent).

Teranet also tracks price changes for 20 other cities not included in the index. Among those cities, the largest year-over-year price declines were recorded in Oshawa, Ont., down 19.3 per cent, Abbotsford-Mission, B.C., down 17.7 per cent, and Peterborough, Ont., down 17.2 per cent and Guelph, Ont., down 15.8 per cent.

Seven cities posted price gains, led by Trois-Rivières, Que., up 18.8 per cent, and Sherbrooke, Que., up 12.4 per cent.

“I don’t think the market will go back to more normal transactions with such high interest rates,” King said. “I think it will be a story for 2024 when we are expecting the Bank of Canada to decrease interest rates.”

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Toronto condo prices will increase this year, new report suggests

A new report from the Toronto Regional Real Estate Board (TRREB) suggests that condo prices could be set for a rebound later in 2023, despite a double digit decline over the last year.

The report, distributed on Thursday, says condo apartment selling prices were 11.4 per cent lower in the first quarter of 2023 than in the same period in 2022.

Sales, meanwhile, were down 42.9 per cent over the same time period as many prospective sellers and buyers remained on the sidelines amid an aggressive interest rate hiking campaign by the Bank of Canada.

However, strong population growth, combined with a crowded market and a larger number of first-time buyers, will result in “renewed growth” in condo sales for the rest of the year, TRREB says.

“Despite increased interest rates, mortgage payments on a condo are now closer to the cost of renting for a lot of potential buyers. In addition, homeownership has the added benefits of equity growth and asset appreciation over the long term,” said TRREB president Paul Baron in a press release.

The average selling price for Toronto condos in the first quarter of 2023 was $726,664, down from $809,879 during the same period in 2022. But that number is expected to increase as first-time buyers enter the market this year.

The condo-specific forecast from TREBB comes amid some signs of a rebounding market overall.

In April, the average selling price of a home in the GTA hit $1,108,606 compared with

$1,096,519 the month before. Prices were still down 15 per cent year-over-year.

“Based on the expectation that first-time buying activity will increase this year, look for the condominium apartment segment to be one of the recovery leaders in terms of sales and price growth,” said TRREB chief market analyst Jason Mercer.

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If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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Springtime Brings Positive Outlook for Greater Toronto Area Housing Market as Prices Trend Upward

March 2023 Greater Toronto Area Market Statistics

Springtime has arrived for the housing market in the Greater Toronto Area (GTA), where sales prices are trending upward once again. The aggregate average sales price for March settled at $1,108,606, with detached homes increasing to $1,468,651 or a 9.6% rise compared to January. Similarly, townhouses rose to $1,036,571, an increase of 6%. The interest rate environment has stabilized, and previously sidelined buyers have released their pent-up demand on the market, creating a shortage of inventory.

As the first quarter of the year ends, the number of sales have been steadily increasing, and all asset classes are firmly back in a sellers’ market. Townhouses had the highest absorption rate, with 640 sales and only 539 active properties remaining at the end of the month. 

The detached market also had an impressive 68% sales-to-listing ratio. While the condo market lags behind other asset classes, the sales-to listing ratio remains at an impressive 54%, the highest since April 2022. 

Overall, the GTA is currently experiencing an absorption rate of 68%, double the rate of January.

There were 6896 total sales across the GTA in March. The condo market had the largest month-over-month sales increase, with 2,121 transactions or an increase of 46%, closely followed by the detached and townhouse markets, which also experienced monthly sales increases of 45% and 38%, respectively. 

The shortage of available properties is heavily contributing to the decrease in sales activity as compared to previous years. Due to a lack of supply, multiple offers have become prevalent across the GTA again. If sellers remain on the sidelines, sales totals will continue to be lower than historical averages. However, sellers willing to list will be feeling like the belle of the ball, with a number of suitors looking to purchase.

“As we moved through the first quarter, Toronto Regional Real Estate Board (TRREB) Members were increasingly reporting that competition between buyers was heating up in many GTA neighbourhoods. 

The most recent statistics bear this out,” said TRREB President Paul Baron. “Recent consumer polling also suggests that demand for ownership housing will continue to recover this year. Look for first-time buyers to lead this recovery, as high average rents move more closely in line with the cost of ownership.”

The GTA housing market has been able to withstand a rapidly rising interest rate environment with great aplomb, which bodes well for the future of the Canadian Real Estate market, according to Royal LePage President and CEO Phil Soper “Eight times a year, the Bank of Canada announces changes to its key interest rate, and for eight consecutive meetings, they aggressively raised rates in an effort to tame runaway inflation.

On March 8th, 2023 they did nothing and doing nothing was a very big deal,” said Soper. “Based on our just-completed national survey, this was the signal that many Canadians were waiting for – an indication that it was safe to wade back into the housing market to search for the family home they so desperately want or need.”

The survey found that more than a quarter (26%) of Canadians who put their home purchase plans on hold over the last year due to rising interest rates will resume their search this spring, following the Bank of Canada’s announcement last week to hold the overnight lending rate at 4.5%. 

Meanwhile, more than one third (36%) say they plan to move forward with their buying intentions, but will wait for the central bank to maintain the current rate for several consecutive months.

With the resurgence of multiple offers, sellers should be increasingly motivated to list their properties, as the downward pressure on sale prices has seemingly dissipated. Property values in the Greater Toronto Area (GTA) have not only stabilized but have also witnessed substantial gains since the beginning of the year. 

Looking ahead to the rest of 2023, barring any significant increases in interest rates or unemployment numbers, this upward trend is expected to persist.

The gains in property values were observed across all asset classes, with the detached market realizing an impressive uptick of 7.2%, resulting in an average sales price of $1,439,735, the largest increase since January 2022. 

Similarly, the condominium market increased month-over-month with an appreciation of 2.5%, translating into a final average sales price of $705,472 for the month of February. Pressure on inventory led to a substantial drop in average days on market which now sits at 22 days, the lowest since August 2022.

Market activity also increased, as evidenced by a substantial improvement in both sales and inventory in comparison to January. The number of properties sold reached its highest level since November 2022, with 4,783 homes changing hands. 

Concurrently, inventory levels continued to rise, with 9,643 active listings across the GTA's housing market. That said, transactions continue to lag as compared to the level of activity we have seen over the past several years. 

As fewer homes change hands, demand from those who in the medium-term anticipate participating in the housing market continues to build.

The positive March data bodes well for the rest of 2023 and beyond, indicating the return of stability and significant demand that will propel the market higher as consumer confidence continues to rise. As we move into the spring, more inventory will be welcomed by eager buyers who have been stymied by an ultra-low inventory environment.

“Views on real estate have consistently been a foundational element in consumer confidence,” said Nik Nanos, chief data scientist of Nanos Research. “Although not returning to the exuberant levels from a year ago when the housing market was red hot, the weekly tracking is seeing the beginnings of a potential positive trajectory.”

As the trajectory of the market moves in a positive direction and sale prices start to tick upward, we anticipate more sellers re-entering the GTA housing market in the coming weeks.

MARKET STATS BY PROPERTY TYPES

MARKET STATS BY CITY/TOWNS

LACKIE: The real estate market is rallying but WHY?

A few weeks back, I went out on a limb and said that all signs were pointing to the fact that the real estate market was waking back up again.

I spoke of houses selling in multiple offers a day or two after going to market. Colleagues around the water cooler who were telling me of clients coming back in out of the wind, ready to think about real estate again.

Buyers were showing a willingness to come in off the sidelines, I said. Could it be that they think the worst is now over?

Well, turns out that theory of mine wasn’t just born of “hopium” — incidentally, my new, most favourite word to come out of the past few months of real estate downtime.

No, no. Hopium be damned — the real estate market is alive again.

By Wednesday of last week — the first days post-March break, which is unofficially the start of the spring market — I personally witnessed four midtown houses go within hours of being listed.

What might we glean from that?

Could it be that people are feeling optimistic?

Clearly consumer sentiment has improved. Though if a year ago someone had told me there could be excitement at seeing rates creep just below 5%, I would have told them to give their head a shake.

But those rates have clearly started to normalize.

Assisted by the fact that markets are evidently now considering the banking meltdown south of the border may serve to bring about the great pivot sooner than late-2024 as consensus had previously thought. Even the permabears seem to acknowledge we are witnessing a rally of sorts.

And while it’s hard to know why, the reality is that life will always go on. 

The three D’s of real estate — death, divorce and debt — are immune to consumer sentiment. And with record lows in transaction volume, there is without a doubt pent up demand waiting to greet spring.

But this appears to be more than that. This seems to also relate to a belief that the worst is now over and while it has certainly been bumpy, better days lie ahead.

But why is that?

I often hear people say Canada is way too dependent upon our housing market to ever let it fail. Of all the G7 nations, Canada is the most indebted with Canadians taking on far more household debt than our G7 peers.

It seems the takeaway from that should-be sobering reality has done less to inspire people to reconsider their comfort levels with debt and more to reaffirm their entrenched belief that it’s probably safe to keep going as we are too big to fail.

The notion of moral hazard comes to mind. Simply put, it’s the idea that one is less likely to guard against financial risk if one believes they are to be protected from potential consequences.

Here we have spent the last year weathering the storm of a real estate bubble bursting and while it has certainly been unpleasant, even painful, most people seem to be okay.

They may now have 80-year amortizations on their mortgage with payments barely covering a dime of principal, but they’re still standing and this too shall pass.

But really, does anyone born after 1980 actually believe they’ll ever be mortgage free? Or are we the generation that was forced to rethink our understanding of homeownership from one of pay-it-down-as-fast-as-possible to that of find-a payment-that-works as you build equity enough to ascend to the next rung. And repeat.

For many, the fact they are in the market at all feels like a penultimate win given the number of surveys that show the extent to which more recent generations feel shut out of the market entirely. 

Being mortgage free must seem like pure Boomer fantasy; we should just be happy not to have to live as renters at the mercy of financialized real estate.

And, of course, the fact that it took so long for the Bank of Canada to step in and raise interest rates in the midst of a rapidly inflating housing bubble has led to questions about how insulated it can really be from wider political pressures.

With that in mind, it’s hard not to think that influence is now baked in. Will our government really allow the housing market to collapse?

Seems many believe not. And honestly who could blame them.

Source: https://torontosun.com/opinion/columnists/lackie-the-real-estate-market-is-rallying-but-why

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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February GTA Condo | Resale & Rental Market Update

February GTA Condo | Resale Market Update

• Market conditions also tightened for GTA condo resales in February, providing support for prices.

• The 1,455 condos that resold in February grew 53% from January to a six-month high, while remaining low in an historical context.

• Sales were down 47% from a year ago and were 27% below the 10-year average.

• However, with new listings up marginally from January (+1.5%) and down 27% annually, the ratio of sales-to-new listings moved back to a balanced level of 52%.

• While active listings of 3,864 units were at their highest level since 2016 and 15% above the 10-year average, inventory levels fell back below 3.0 months of supply for the first time since May 2022.

• Average resale prices increased 2.6% month-over-month in February to $705,472, while posting an 11.8% year-over-year decline.

• Compared to the pre-pandemic average in February 2020 ($666,684), GTA condo resale prices were up 5.8%.

       *Statistics Provided by Urbanation

February GTA Condo | Rental Market Update 

• The GTA condo rental market showed renewed strength during February at near record-high rent levels.

• Market conditions tightened last month as new listings decreased 9% from January, compared to a 2% month-over-month decline in lease transactions.

• Leasing volume was up 6% annually in February, surpassing the 4% annual increase in new listings and marking the first time since June 2022 that growth in lease activity outpaced new listings.

• With demand strengthening relative to new supply and inventory remaining low at 1.0 months, average rents increased 1.0% month-over-month in February, which followed a negative three-month average growth rate in recent months.

• At $2,752, average rents in February were 13.9% higher than a year ago and 14.8% higher than three years ago just prior to the start of the pandemic, while 2.4% below the record high set in October 2022 ($2,819).

       *Statistics Provided by Urbanation

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

If you found this article helpful please hit "Like" and "Share".

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Low Inventory Once Again Spurs Increased Competition for Homes in the GTA

February 2023 Greater Toronto Area Market Statistics

During the month of February, the housing market in the Greater Toronto Area (GTA) experienced a noticeable revival, characterized by a surge in property values across all asset classes. Notably, the average sales price for all property types increased by 5.4% when juxtaposed with January's data, culminating in a February average sales price of $1,095,617.

The gains in property values were observed across all asset classes, with the detached market realizing an impressive uptick of 7.2%, resulting in an average sales price of $1,439,735, the largest increase since January 2022. Similarly, the condominium market increased month-over-month with an appreciation of 2.5%, translating into a final average sales price of $705,472 for the month of February. Pressure on inventory led to a substantial drop in average days on market which now sits at 22 days, the lowest since August 2022.

Market activity also increased, as evidenced by a substantial improvement in both sales and inventory in comparison to January. The number of properties sold reached its highest level since November 2022, with 4,783 homes changing hands. Concurrently, inventory levels continued to rise, with 9,643 active listings across the GTA's housing market.  That said, transactions continue to lag as compared to the level of activity we have seen over the past several years.  As fewer homes change hands, demand from those who in the medium-term anticipate participating in the housing market continues to build.

The positive February data bodes well for the rest of 2023 and beyond, indicating the return of stability and significant demand that will propel the market higher as consumer confidence continues to rise. As we move into the spring, more inventory will be welcomed by eager buyers who have been stymied by an ultra-low inventory environment. 

 “Views on real estate have consistently been a foundational element in consumer confidence,” said Nik Nanos, chief data scientist of Nanos Research. “Although not returning to the exuberant levels from a year ago when the housing market was red hot, the weekly tracking is seeing the beginnings of a potential positive trajectory.” 

As the trajectory of the market moves in a positive direction and sale prices start to tick upward, we anticipate more sellers re-entering the GTA housing market in the coming weeks.  

Pent-Up Demand for Homes Continues to Build

Eight successive interest rates hikes in the past year, while necessary to cool inflation, have created some unintended consequences which in the medium to long-term will put additional strain on the GTA’s already tight housing supply.

Buyers who are taking a wait-and-see approach will be faced with increased competition when they do return to the market. 

Increased immigration, fewer than necessary building starts, changes to household formation trends, particularly among millennials, are building demand that will be unleashed on the housing market in the next few years.

“With the expectation that interest rates could fall in 2024, the short-term relief in house price inflation that big cities across Canada are experiencing right now is blinding policymakers to the medium-term crisis”, Phil Soper, President and CEO of Royal LePage recently shared with the Toronto Star. 

The Toronto Regional Real Estate Board shares the same sentiment.  “As we move toward a June mayoral by-election in Toronto, housing supply will once again be front and centre in the policy debate. New and innovative solutions, including the City of Toronto’s initiative to allow duplexes, triplexes and fourplexes in all neighbourhoods citywide, need to come to fruition if we are to achieve an adequate and diverse housing supply that will support record population growth in the years to come,” said TRREB Chief Executive Officer John DiMichele. 

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

If you found this article helpful please hit "Like" and "Share".

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INTERIOR DESIGN TRENDS FOR 2023

Are you ready for the "Maximalist era" where the art of more-is-more? - Layered patterning, highly saturated colors, ample accessories and art, and a real sense of playfulness and bold gestures.

Well, this year's trend is to embrace sustainability and re-use antiques and vintage to transform your space with timeless, classic French and English Country style decor, perhaps even some Modern Gothic.

The emphasis is on incorporating luxurious and rich dark wood tones; warm earthy rich walls, baseboards & ceiling colors - all in same color; statement wallpaper; lush velvet, silk and linen textiles; curvy furniture, arched bookcases, walkways and doors; fluted glass and ribbed wood; exquisite trim work on furniture and walls for a timeless yet modern sanctuary.

Below are some examples of my favourite classics. Please let me know if you have any favourites.

P. S. If you are planning to sell your property and would like some ideas on how to increase the value of your home, make it more attractive to buyers, I'd be happy to have a consultation with you.

Please reach out at any time.

#InspiredByDesign #RealEstateStaging #TransformingSpaces #TimelessStyle #IncreaseHomeValue #DesignConsultation #2023DesignTrends #MixTrendswithClassics #EcoFriendlyDecor #InteriorDesign #Vintage #Antiques #ReuseAntiques #TraditionalStyle #ClassicStyle #MixMetals #TrimWork #Sustainability #LuxuriousLiving #luxuryhomes #luxuryrealestate #homestyling #homedesign #StatementWallpaper #RichTones #FrenchAndEnglishCountryStyle #MixOfMetals #CozyAtmosphere

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Buyers Poised to Enter the Market as Interest Rates Stabilize, However Inventory Lags

The Bank of Canada’s anticipated pause on interest rate hikes sets the stage for a better spring market for buyers and sellers, provided that there is enough inventory to satisfy demand

GTA Market Activity – January 2023

The average selling price in the GTA for January 2023 at $1,038,668, slightly lower than

December 2022 averages, while benchmark prices remain steady month-over-month, a trend

which has continued in the GTA since late summer.

The GTA saw 3,100 sales in January, slightly below December 2022 volumes, and down 44.6%

from the blistering pace of sales we saw last January. The sales total represents the second

lowest instance of sales since 2009. The only other time sales dipped to these levels was April

2020, which of course turned out to be an anomalistic low created by Covid uncertainty. The

2020 uncertainty for the real estate market was short-lived and sales rapidly increased all the

way to 15,652 by March of 2021, an all-time high. It is noteworthy that those purchasers willing

to come off the sidelines and enter the market were able to realize substantial equity gains since

April 2020.

Listings are still selling, on average, in less than one month.

Lack of Inventory Spurs Competition

New listings remained scarce in January. The lack of inventory is creating increased competition

for desirable homes, particularly in the low-rise category. Buyers who held off last year on

making a move are now competing for quality homes, and in some cases finding themselves in

multiple offer scenarios given the insufficient number of listings on the market. Sellers looking

to list their home in the remaining winter months may be pleasantly surprised by the attention a

well maintained, well priced home will receive in this current market.

“Home sales and selling prices appear to have found some support in recent months. This

coupled with the Bank of Canada announcement that interest rate hikes are likely on hold for

the foreseeable future will prompt some buyers to move off the sidelines in the coming months.

Record population growth and tight labour market conditions will continue to support housing

demand moving forward,” said Toronto Regional Real Estate Board (TRREB) President Paul

Baron.

If the volume of listings remains low, buyers, who are simultaneously feeling impatient and

encouraged by stabilizing interest rates, may create some modest upwards pressure on prices

on a month-over-month basis, particularly as we move into spring and more buyers come off the

sidelines after waiting out the market during last year’s interest rate increases.

Bank of Canada Announcement Provides Assurances to Consumers

On January 25th , in light of higher than anticipated employment numbers in December 2022,

The Bank of Canada raised its benchmark interest rate by 25 basis points, to 4.5%. While this

was the Bank’s eighth consecutive interest rate increase, the announcement was primarily

significant due to the Bank’s inclusion of forward guidance that it expects to hold off on future

rate hikes. Economists are already predicting that the Bank of Canada will turn its focus to

easing monetary policy by the end of this year. This shift allows consumers to once again rely

on mortgage interest rates remaining steady and with that, renews confidence that real estate

will not see the declines in value in 2023 that we saw in 2022.

“Home prices declined over the past year as homebuyers sought to mitigate the impact of

substantially higher borrowing costs. While short-term borrowing costs increased again in

January, negotiated medium-term mortgage rates, like the five-year fixed rate, have actually

started to trend lower compared to the end of last year. The expectation is that this trend will

continue, further helping with affordability as we move through 2023,” said TRREB Chief Market

Analyst Jason Mercer.

Current three and five year fixed mortgage rates are typically under 5%.

Timing the Market: Some Historical Perspective

While the cost of borrowing has gone up in the last year, the average price of properties across

the GTA has fallen from the record highs recorded last winter. This creates an opportunity for

wealth accumulation for those willing to make a move. As interest rates stabilize, the likelihood

that values move higher in the second half of 2023 increases, resulting in the potential for equity

increases for those willing to step to the plate while others continue to sit on the bench.

Aggregate values in the GTA are down approximately 20% from the peak, however, compared

to average home prices throughout 2020, current prices remain 16% higher over a two-year

span. The last time an opportunity like this presented itself in the GTA came during the 2017

market correction. In hindsight, it was an excellent opportunity to enter the market or for those

looking to move up in value or asset class. Property values in the GTA have increased 45% since 2017.

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

If you found this article helpful please hit "Like" and "Share".

#Januarymarketreport #realestatemarketreport #royallepage #torontoliving #torontomarket #thejunction #highpark #bloorwestvillage #swansea #homesellers #homebuyers #realestatebroker #lubabeleybroker #sellingrealestate #sellingtorontohomes #serviceyoucantrust #workingforyou #lubabeleyrealestateservices #royallepagebroker

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GTA Real Estate Market Proves its Resiliency in 2022, Prepares for Future Impact of Demand for Housing

2022 In Review

While the housing market in the Greater Toronto Area (GTA) experienced a shift in 2022, it also showed its resiliency in the face of rising interest rates.  The average selling price last year in the GTA was $1,189,850, representing an 8.6% increase over the 2021 average of $1,095,333.  The increase in average price growth is attributed to the strong start we saw in 2022.  The pace of growth moderated from the spring of 2022 onwards.

As interest rates increased, home sales trended lower in the spring and summer of 2022.  Transactions were down 38.2% compared to the record sales activity we saw in 2021, and home prices adjusted downward to accommodate the impact of higher interest rates.  However, in August we saw home prices start to level off, and remain steady for the remainder of the year.  Supply remained tight despite fewer transactions, and the lack of homes available for sale supported price stability and in some pockets of the GTA led to continued price increases, despite higher borrowing costs. 

Lack of supply also impacted the rental market and tight rental market conditions caused rental rates to skyrocket in 2022, up 23.7% in the GTA compared to last year. 

GTA Market Activity – December 2022

In December, seasonally adjusted sales activity increased 1.1% over November and prices remained flat month-over-month.

The Toronto Regional Real Estate Board reported 3,117 sales in December 2022, down 48.2% compared to last December’s unprecedented level of activity, and new listings were also down 21.3% as compared to last year. 

Homes averaged 27 days on market, an average that is longer than the blistering pace we saw last December, however still shorter than the average days on market in December 2020 and December 2019.

Looking Ahead

Home prices in the GTA levelled off in the late summer and remained stable for the rest of 2022, suggesting the market adjustments seen earlier in year may be coming to an end. 

While much focus has been directed at the negative impact of rising rates, there are a number of factors supporting stable home prices in the current environment.  

The Royal LePage Market Survey Forecast suggests that the supply of homes for sale must exceed demand in order for prices to drop materially. Organic demand is supported by the current lifecycle of our large millennial demographic and a record number of new immigrants who need to be housed. This month, Immigration, Refugees and Citizenship Canada announced that Canada added over 431,000 new permanent residents in 2022, breaking 2021’s record of 401,000 newcomers. 

Smaller household sizes also mean more housing units are needed per capita than in the past. Pent-up demand is growing from buyers who have the ability to transact but have chosen not to in these less certain times.

Based on pent-up demand and the influx of newcomers to the GTA in 2023, demand for condominiums is anticipated to increase. Homebuyers who have been sitting on the sidelines who begin to return to the market in search of more affordable housing options will be particularly drawn to this housing segment, as will investors anticipating greater returns based on the sharp rise in rental prices and the pace of people looking for housing entering Toronto and the surrounding areas. 

Low unemployment, and a large buffer of unfilled job vacancies, means that few families are likely to need to sell their homes for financial reasons. Homes are modestly less expensive today than at the height of the pandemic boom, offsetting some of the impact of rising rates, and household savings remain above long-term norms, helping overcome down payment hurdles.

In terms of sales activity, the Bank of Canada has suggested that the current interest rate hiking cycle is nearing its end.  An important trend in 2023 will be the transition from a rising interest rate environment to a stable interest rate environment, which will help revive consumer confidence and begin increasing the number of annual transactions to more typical levels. 

New Year, New Rules

The ringing in of the New Year also ushered in new federal regulations to assist home buyers, as well as reduce speculation.

Starting in the 2022 tax year, the First Time Home Buyers Tax Credit has doubled to $1,500.  

This year, Canada is also introducing a First Home Savings Account.  Starting April 1, first-time homebuyers under 40 years old will be allowed to invest up to $40,000 total or up to $8,000 each year toward the purchase of a home with no tax on contributions or withdrawals. If funds are not used to purchase a home by the age of 40, they can be converted into RRSP savings.  

For non-first time buyers, another Canadian savings vehicle, the Tax Free Savings Account, or TSFA, has increased its annual contribution cap to $6,500.  TSFA savings are tax free upon withdrawal. 

In order to limit real estate speculation, Canada has also introduced a ‘flipping tax’.  As of January 1, 2023, profits from the sale of a property which has been owned for less than 12 months will be taxed as business income.  The new law is subject to a number of exceptions, such as death or serious illness of the homeowner and sales due to the dissolution of a marriage.  

Finally, effective January 1, 2023, Canada’s two-year foreign buyer ban took effect.  Under the ban, individuals and corporations from outside of Canada can no longer purchase residential real estate.  There are exceptions to the ban for permanent residents, commercial property including multiplexes of four or more units and properties situated in certain rural areas.   Individuals in Canada on work permits may also be exempt provided they meet certain requirements including working and filing taxes within Canada for three out of the four years prior to purchasing a property. 

2023 national aggregate home price forecast to end year 1.0% below fourth quarter of 2022: Royal LePage

First quarter expected to show double-digit year-over-year declines, with modest quarterly price growth in the second half of next year

On a quarter-over-quarter basis, prices expected to flatten in Q2 and begin modest improvement in second half of the year, ending 2023 on upward trajectory; release includes national aggregate quarterly forecast for 2023

Condominium prices expected to outperform single-family homes in all major markets except Edmonton and Winnipeg.

Greater regions of Toronto and Montreal forecast to see Q4 2023 aggregate price decline of 2.0% year-over-year.

Q4 2023 aggregate home price in Greater Vancouver projected to dip 1.0% year-over-year.

Despite declining affordability, heightened by rising interest rates, continued housing supply shortage acts as a floor on home price declines.

TORONTO, December 13, 2022 –Since the Bank of Canada began raising interest rates aggressively in March of this year, home prices in many major markets across Canada have been decreasing. The rate of decline, however, has been modest. According to the Royal LePage Market Survey Forecast, the aggregate[1] price of a home in Canada is set to decrease 1.0 per cent year over-year to $765,171 in the fourth quarter of 2023, with the median price of a single-family detached property and condominium projected to decrease 2.0 per cent and increase 1.0 per cent to $781,256 and $568,933, respectively.[2] “After nearly two years of record price appreciation, fuelled by a steep climb in household savings, very low borrowing costs and an overwhelming desire for more space during the COVID-19 pandemic, the frenzied housing market overshot and the inevitable downward slide or market correction began, intensified by rapidly rising borrowing rates,” said Phil Soper, president and CEO, Royal LePage. “In an era characterized by the unusual, this correction has not followed historical patterns. While the volume of homes trading hands has dropped steeply, home prices have held on, with relatively modest declines. We see this as a continuing trend.”

Soper continued, “Much focus has been directed at the negative impact of rising rates; there has been far less discussion on factors supporting home prices.”

The higher cost of borrowing erodes affordability, which historically has pushed people out of the market, reducing demand and resulting in falling home prices. Conversely, there are a number of factors supporting home prices in the current environment.

The supply of homes for sale must exceed demand in order for prices to drop materially. Canada is struggling with an acute, long-term housing supply shortage. Organic demand is supported by the current lifecycle of our large millennial demographic and a record number of new immigrants who need to be housed. Smaller household sizes mean more housing units are needed per capita than in

the past. Pent-up demand is growing from buyers who have the ability to transact but have chosen not to in these turbulent times.

Low unemployment, and a large buffer of unfilled job vacancies, means that few families are likely to need to sell their homes for financial reasons. Homes are modestly cheaper today than at the height of the pandemic boom, offsetting some of the impact of rising rates, and household savings remain above long-term norms, making it easier to overcome down payment hurdles.

“Traditional wisdom says that a recession triggers widespread job losses and missed mortgage payments. People are forced to sell or the bank forecloses and lists the property, flooding the market with new listings when demand is weak. In this post-pandemic period, people have kept their jobs. In fact, they have seen wages and salaries rise,” said Soper. “We have a tightly managed national mortgage portfolio, with historically low default rates, supported by homeowners who have been required to qualify for a loan under the strict federal stress test for the last five years. And, we can’t forget that Canada has been grappling with an acute shortage of homes overall. We simply don’t see the factors at play that would result in a large drop in home values.”

While home prices nationally are forecast to see modest quarterly gains in the third and fourth quarters of 2023, values are expected to remain lower than the same periods in 2022 throughout the year. The aggregate price of a home in Canada is forecast to be 12.0 per cent lower in Q1 of 2023, compared to the same quarter in 2022, reflecting a 2.4 per cent decline over the fourth quarter of 2022. In the second quarter of next year, the national aggregate price is forecast to be 7.5 per cent lower year-over-year, and remain virtually flat on a quarterly basis. In the third quarter, homes are expected to be 2.0 per cent lower year-over-year, reflecting a 0.7 per cent increase on a quarterly basis. And, in the fourth quarter of 2023, the national aggregate price of a home is expected to end the year 1.0 per cent below the same quarter in 2022, an increase of 0.8 per cent quarter-over-quarter.

“Comparing prices to the previous year, the first quarter of 2023 should show the deepest decline in home values,” said Soper. “At that time, we will be comparing 2022’s final weeks of pandemic housing market excess – when home prices reached historically high levels – to a much quieter market, where values have had a full year to moderate. We expect year-over-year comparisons to show progressively less price decline as the year goes on, with small week-to week improvements in the third and fourth quarters, allowing Canadian home values to end 2023 essentially flat to where we are today.”

The recovery is not expected to be evenly distributed. Regional markets that saw more moderate price growth during the pandemic real estate boom are expected to experience more modest declines. Due to their relative affordability, cities like Calgary, Edmonton and Halifax are expected to record modest price gains in 2023, as they continue to attract out-of-province buyers, especially first-time homebuyers from southern Ontario and British Columbia looking for more affordable housing.

While home prices have come down from the record highs recorded in the first half of this year, they remain well above pre-pandemic levels. The projected aggregate price of a home in Canada in the fourth quarter of 2023 is expected to sit 15.0 per cent above Q4 of 2020, and 18.4 per cent above Q4 of 2019.

Without a significant increase in housing supply, a return of buyers to the market, some driven by very high rental rates, should start to put upward pressure on prices again. And, in a tight-inventory market, sellers will remain hesitant to list their properties if they are unable to find a move-up home to purchase.

“It’s important to note that many would-be buyers currently sitting on the sidelines have not been forced to exit the market. While some of these families have been priced out for now by rising borrowing rates, we believe some have voluntarily adopted a wait-and-see attitude, not wanting to buy a property today that may be worth less tomorrow. Yet people in their thirties, forties and fifties have known only in Canada where home prices rise faster than incomes. When interest rates appear to have stabilized, these buyers may jump back into the market, anticipating a return to escalating home values,” concluded Soper.

4 key dates for investors to mark in their 2023 calendars

Investors eager to put 2022 behind them can turn their attention to a new year of opportunity. From a tax perspective, opportunity knocks four times in 2023, giving average Canadians the chance to keep more of their tax dollars in their pockets.

All four can be used as part of a broader tax strategy that can save thousands of dollars over the long run. It can get complicated depending on your individual circumstances, so it might be best to discuss them with a qualified advisor or tax professional.

JANUARY 1: TFSA CONTRIBUTION LIMIT EXTENSION

Canadians who have contributed the maximum amount to their Tax-Free Savings Accounts will be permitted to contribute another $6,500. Ottawa has raised the annual TFSA extension limit from the usual $6,000 as the result of a formula that factors in inflation. If you withdrew money from your TFSA in 2022, that contribution space can also be reclaimed in the new year. There is no contribution deadline for a TFSA. Allowable contribution space can be carried forward to future years for the vast majority of TFSA holders who don’t contribute the maximum amount. Over-contributions can result in penalties from the Canada Revenue Agency (CRA), so it’s important to keep track.

The TFSA is an ideal investment vehicle because those contributions can be invested in just about anything, gains are never taxed, and you can withdraw funds at any time.

MARCH 1: RRSP CONTRIBUTION DEADLINE

Registered Retirement Savings Plan contributions can also be invested and grow tax-free in just about anything, but if you want to deduct them from your 2022 taxable income you must contribute by March 1.

Tax savings are based on your personal marginal tax rate, so the more income you generated in 2022, the bigger the savings. Canadians love to get those RRSP refunds in the spring but it’s important to know RRSPs are fully taxed when they are withdrawn; ideally at a low tax rate in retirement. If your income was low in 2022, a TFSA contribution could be a better option.

If you want to contribute to both your TFSA and RRSP, consider contributing to your RRSP before the March 1 deadline and putting the refund in your TFSA.

APRIL 1: THE LAUNCH OF THE FHSA

It’s no April fool’s joke. The federal government is making good on its election promise to help new homebuyers save for down payments through the First Home Savings Account.

Starting April 1, first-time homebuyers under 40 years old will be allowed to invest up to $40,000 total or up to $8,000 each year toward the purchase of a home with no tax on contributions or withdrawals.

It’s the best tax perks of an RRSP and TFSA and can also be invested in just about anything. That means contributions can result in a tax refund like a RRSP, but contributions and gains are never taxed and can be withdrawn at any time like a TFSA.

If funds held in a FHSA are not used for a home purchase by the age of 40, they can be converted to normal RRSP savings.

APRIL 30: INCOME TAX DEADLINE

There’s no way for individual Canadians to avoid the dreaded income tax deadline but there are ways to steer tax dollars into your investment portfolio.

If you make an RRSP contribution before the deadline and want the refund by spring, don’t forget to deduct it from your taxable income when you file ahead of the April 30 deadline.

Also, don’t forget to include any other deductions or credits you or your spouse have accumulated throughout the year.

TFSA contributions are not tax deductible.

Be sure to include all income received during the year including capital, dividend or income gains from non-registered (not RRSP or TFSA) investment accounts.

If you suffered capital losses on the sale of investments in a non-registered account in 2022, they can be applied against capital gains going back three years or going forward indefinitely.

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

If you found this article helpful please hit "Like" and "Share".

#Decembermarketreport #2022inreview #realestatemarketreport #royallepage #torontoliving #torontomarket #thejunction #highpark #bloorwestvillage #swansea #homesellers #homebuyers #realestatebroker #lubabeleybroker #sellingrealestate #sellingtorontohomes #serviceyoucantrust #workingforyou #lubabeleyrealestateservices #royallepagebroker

Photo curtesy of Marko Manna https://www.instagram.com/markoxto/

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Stable Prices, Low Inventory, Fewer Transactions

GTA Real Estate Remains in a Holding Pattern for Fourth Consecutive Month 

GTA Market Activity – November 2022

While typically a quiet month of market activity based on seasonal patterns, November home sale and new listing totals lagged below the Greater Toronto Area’s long-term averages. 

Average months of available inventory have plateaued since the summer, with only 2.3 months of inventory currently available for sale.  With a low number of homes for sale in the region, sale prices remain stable at an average of just under $1.1m, a number that has remained relatively unchanged since August of 2022. 

Prices in the GTA peaked in the first quarter of 2022.  While the gap between year-over-year price comparisons will be more pronounced in the coming months, the month-over-month price trend has stabilized. 

“Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the marked downward price trend experienced in the spring has come to an end. Selling prices have flatlined alongside average monthly mortgage payments since the summer,” said Toronto Regional Real Estate Board (TRREB) Chief Market Analyst Jason Mercer.

Homes for sale continue to sell quickly, averaging 22 days on market, the same average we have seen for the past four months. 

Inventory Remains an Issue

The current pace of listings and available inventory remain tight, especially in light of factors that generate housing demand, such as high employment rates, continued immigration to the province and changes to household formation patterns for Canadians.  With the recently announced increase in federal immigration targets, the GTA remains susceptible to a renewed surge in demand and accompanying upward pressure on pricing.  

“Increased borrowing costs represent a short-term shock to the housing market. Over the medium- to long-term, the demand for ownership housing will pick up strongly. This is because a huge share of record immigration will be pointed at the GTA and the Greater Golden Horseshoe (GGH) in the coming years, and all of these people will require a place to live, with the majority looking to buy. The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth,” said TRREB President Kevin Crigger.

While efforts are underway to increase housing supply in the region, interest rates, labour costs and a labour shortage are creating a challenging environment for developers.  Even under favourable conditions, it would be difficult at best to build at a pace to meeting population growth demand. 

“We have seen a lot of progress this year on the housing supply and related governance files such as the More Homes Built Faster Act. This is obviously good news. However, we need these new policies to turn into results over the next year. Otherwise, the current market lull will soon be behind us, population growth will be accelerating, and we will have done nothing to account for our growing housing need. The result would be enhanced unaffordability and reduced economic competitiveness,” said TRREB CEO John DiMichele.

Interest Rates Anticipated to Rise at a Slower Pace

At the time of writing, it is widely anticipated that the Bank of Canada will raise interest rates again on December 7th by 25 or 50 basis points.  This increase will mark the seventh increase in 2022, however the Bank has recently signaled that this rate hike cycle is nearing its end.  

Employment in Canada in November showed that our labour market remains tight, while our gross domestic product (GDP) grew by 2.9% in the third quarter, higher than the 1.5% that was forecasted, but lower than previous quarters.  The details of the GDP data also show a contraction in domestic demand, and no growth in October, signs that higher borrowing costs are beginning to have the desired impact on economic activity. 

Looking Ahead

Following the price declines seen following initial rate hikes starting in March 2022, prices in the GTA have stabilized over the last several months, indicating that most of the price declines anticipated in this rate hike cycle are behind us.  While inventory remains low and prices relatively stable, RBC predicts that rising interest rates will keep market activity quiet into early 2023. Following a period of stable interest rates, it is anticipated that market activity will return to more seasonal norms.  The impact of additional demand on already tight supply will create a more competitive environment for buyers and sellers than we expect to see over the winter months. 

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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GTA Market Remains Resilient As Prices Level Off For The Third Straight Month

The GTA Market Remains Resilient as Prices Level Off for Third Straight Month

GTA Market Activity – October 2022

October marks the third straight month prices have held steady in the GTA, after values retreated following interest rate increases in the spring and early summer.  The average price of a home in the GTA is just under $1.1 million, up 1% since August of this year.   

One of the drivers behind this resiliency is persistent low inventory.  Current sales activity is similar to what we saw in the GTA in October 2008, however, available inventory is around half of what was for sale at that same time.  New listings in October were down by 11.6% year-over-year and reached a level not seen since 2010.   

According to TRREB President, Kevin Crigger, “With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound.”

GTA Prices Hold Despite Interest Rate Pressures 

Just how resilient is the current GTA housing market?  Despite the rapid pace of six interest rate hikes this year, the benchmark home price is only 1.3% lower than it was a year ago.  At that time, The Bank of Canada’s overnight rate was 3.5% lower than it is now.  

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle.” said TRREB Chief Market Analyst Jason Mercer.

Toronto’s Core Outperforms

An interesting trend has emerged in Toronto’s core over the past three months, as median prices excluding Toronto’s immediate suburbs have climbed approximately 14% in this period. Low inventory, consumers taking advantage of lower prices to move up in to freehold homes, combined with a return to the office and renewed vibrancy in the downtown core is driving competition and increased prices in this area of the GTA. 

Rental Rates Rise Dramatically

Rents in the City of Toronto and surrounding areas continue to climb, with increases of over 27% year-over-year for both one and two bedroom units.  Investors in Toronto and Vancouver saw rental rates nosedive during the pandemic however, since then rents have rebounded dramatically, up almost 46% in Toronto and 54% in Vancouver from pandemic lows. 

Pressures on Supply Will Continue

The current supply of homes available to buy or rent is not keeping up with demand from our growing population.  

The federal government has unveiled new plans for an increase in the number of immigrants entering Canada, with a goal of seeing 500,000 people arrive each year by 2025 in order to address the labour shortage affecting the country. That is up from the government’s original target of approximately 400,000 newcomers each year. 

While alleviating Canada’s labour shortage is critical, an influx of people, particularly to our major urban centres, will put additional pressure on our already scarce housing supply.  When housing supply is strained, home prices rise.  

Ontario Aims to Build 1.5 Million Homes over Ten Years

The Ontario government has unveiled a series of new measures aimed at tackling the province’s housing supply shortage and affordability issues, including plans to cut development costs and to allow property owners to build up to three residential units on a single lot without a bylaw amendment.

The province also proposes to freeze, reduce and exempt fees associated with new home construction in order to spur building. Affordable housing, non-profit housing and inclusionary zoning units would be exempt from various charges.  Rental builders would also see development charges reduced, with larger discounts on family-sized units.

Ontario's move to reduce the red tape and fees associated with the development of housing is a positive step towards alleviating the chronic supply issues plaguing the province.  

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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GTA Home Prices Remain Stable as Inventory Falls Short of Demand

GTA Market Activity – September 2022

In September, GTA buyers were faced with significantly lower inventory than might be anticipated in an early fall market.  New listings in September were down 16.7% year-over-year, the lowest number of new listings reported for the month of September since 2002.  With fewer homes to choose from, multiple offer scenarios were once again commonplace across the GTA last month. 

Average prices in the GTA this September were higher than they were in August, despite inflation and increased borrowing costs.  The average price of a home in the GTA is now $1,086,762.  This is 4.3% lower than the average price seen in September 2021, however benchmark home prices remain 4.3% higher than they were a year ago. 

Overall, GTA prices have stabilized as compared to the spring months where we saw some price declines.  In fact, a number of GTA neighbourhoods, prices have increased significantly over the past two months due to increased competition and lack of inventory.  

While the median price of a home in the GTA is about the same as it was last year, the cost to rent a home in the GTA has skyrocketed in the same period. Median rental costs are up approximately $500 per month since September 2021 to just under $3,000 per month, creating new opportunities for investors who may have been concerned about carrying costs when interest rates started climbing.  First- time buyers should also assess whether the cost of renting makes sense given current rental rates and inventory, as compared to purchasing a home. 

September sales volume remained well below what we saw last year at the same time.   September 2022 saw 5,038 sales, which is 44.1% lower than September 2021.  September also saw less homes sold than August, when typically the start of fall would drive more home sales.

When sales activity is below average, the issue of supply tends to take a backseat. However, when sales activity returns to normal levels, the issue of supply will once again create pain for buyers looking for the opportunity to enter or move up in the market. Statistics Canada recently released a report showing Canada’s population has recently been growing at almost double the rate of the rest of the G7, and that trend is expected to accelerate. Simply put, our current infrastructure and housing supply is inadequate to support this level of growth, which long term, will continue putting pressure on prices and create scenarios where those qualified and looking to purchase a home will be forced to compete with others for a limited inventory of available properties.

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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Prices Stabilize, A Long Term Supply Crisis Looms & An Affordability Analysis Which Might Surprise You

GTA Market Activity - August 2022

In August, sales activity volume remained below average. 5,627 homes were sold in the GTA in August, which is a 20-year sales volume low and 34.2% lower than last August, but represented 15% more sales than we saw in July, a jump which is atypical for this time of year and may signal an early start to the fall market.

Prices stabilized this month, and the average selling price was $1,079,500, 0.9% higher than last August and benchmark home prices remain 8.9% higher than they were a year ago.

While monthly fluctuations help us interpret market trends, it is important to remember that while the stock market sees values fluctuate on a daily basis, real estate is a long-term investment with returns more accurately calculated year-over-year.

Months of inventory is trending down again after increasing the past few months. Typically, when inventory climbs, that signals a cooling of the market and house prices. When inventory declines, the market becomes more competitive, and prices tend to increase. According to the Toronto Regional Real Estate Board, “If this trend continues, it could indicate some support for selling prices in the months ahead.”

As more buyers return to the fall market in the coming weeks, the lack of inventory may create a more competitive environment than we anticipated.

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Costs Associated with Home Purchases Improve Despite Higher Interest Rates

Much has been said in the media about the impact of interest rates on affordability for homeowners. While interest rates have been increasing since spring 2022, home prices have also moderated during this same period, creating an offset that actually decreases purchase costs and in some cases, monthly carry costs. Let’s look at an example:

A detached home in the GTA is sold for $1.5M in January 2022. Over the summer, the same home sells for approximately 20% less. At the time of purchase, the buyer saves nearly $70,000 on their 20% down payment, and $6,740 in Land Transfer Tax ($13,480 if the property is in Toronto).

Now, let’s look at the mortgage costs. The buyer purchased for $1.5M and obtains a mortgage of $1.2M at 2.79%, resulting in monthly payments of $5,550. In the summer, the buyer purchases for $1.16M, and obtains a mortgage for $930k at 5.09% resulting in monthly payments of $5,460.

Despite higher interest rates, the upfront costs to purchase the home are significantly lower, and the monthly carry costs are slightly lower than in January 2022.

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Detached Home Purchase / Mortgage Rate Increase Cost Analysis

Although mortgage rates have risen over the past six months, the costs associated with purchasing a home have decreased.

Population Growth and Household Formation Will Drive Long Term Supply Issues

This month, new projections were released from Statistics Canada outlining that Ontario’s population will grow from 14.8 million to approximately 19 million by 2043 in a medium growth scenario and could even surpass 21 million in a higher growth scenario. The new projections exceed every province in Canada other than British Columbia and Alberta.

The reasons behind the province’s explosive growth are two-fold. First, immigration. According to RBC, over the past ten years, Canada’s population has grown over twice as fast as the average of its peer countries in the OECD. The Federal government’s target is to bring in a record 1.3 million new permanent residents by 2024 and that should add 555,000 new households.

There is another trend in our society that RBC economists say is often overlooked: the size of Canadian households is shrinking. A growing share of young Canadians are also opting to live alone, and are starting their families later. On the other side of the spectrum, older Canadians are living longer than prior generations, and many will stay in their homes for longer.

Canada’s surge in immigration, combined with shrinking household sizes, will strengthen demand for housing on a long-term basis. As these forces gain strength, over 700,000 more households will be formed in Canada by 2024 as compared to 2021.

As our population booms, governments need to play catch up on building the necessary infrastructure to accommodate newcomers and new households.

This month, Toronto released a five-point plan to create more housing and address affordability challenges in the city.

The plan consists of five pillars:

• Expanding housing options by permitting “missing middle” housing

• Cutting red tape and speeding up approval times by creating a Development and Growth Division

• Asking the province to allow the city to enact a “use it or lose it” policy for developers sitting on approved, but undeveloped, land

• Allocating a portion of city-owned land to be developed by non-profits

• Incentivizing the construction of purpose-built rental housing by reducing fees and charges

Provincially, the Ontario government has vowed to tackle the housing crisis by building 1.5M new homes over the next decade.

The average selling price was $1,079,500 as compared to $1,074,754 the previous month. The average price is slightly above last year’s average of $1,070,201.

The average number of listing days on the market was 22, up from 16 in July 2022. Total active listings were up 62.3% year-over-year, and new listings were down 0.7% year-over-year, from 10,615 in August 2021 to 10,537 in August 2022.

Benchmark price by home type (all TRREB reporting areas):

• The benchmark price for detached homes was $1,414.000, 6.45% higher than in August 2021.

• The benchmark price for attached homes was $1,079.000, 8.38% higher than August 2021.

• The benchmark price for townhouse homes was $838,300, 11.79% higher than August 2021.

• The benchmark price for condo apartments was $739,000, 17.87% higher than August 2021.

Average price by home type (416 and 905):

• The average price for detached homes was $1,379,700, 3.1% lower than in August 2021.

• The average price for semi-detached homes was $998,490, 3.4% lower than in August 2021.

• The average price for townhouse homes was $900,307, 2.9% higher than August 2021.

• The average price for condo apartments was $711,321, 3.6% higher than August 2021.

All stats are provided by Toronto Regional Real Estate Board.

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Proof Point: Demographics a powerful counterforce in Canada’s housing market correction

AUGUST 2022

It’s not just immigration: shrinking households will drive housing demand Canada is in the midst of a steep housing correction. And though this cycle has yet to fully play out, it’s unlikely to morph into the type of prolonged spiral observed in the U.S. during the 2008 financial crisis. One of the main reasons: demographic demand for housing in Canada is strong—and it’s getting even stronger.

We expect the number of Canadian households to rise by 730,000 by 2024 compared to 2021, adding 240,000 new households annually. Immigration is key to this surge: Ottawa’s targets are set to bring in a record 1.3 million new permanent residents, adding 555,000 new households by 2024.

But another critical factor is the often overlooked, longstanding impact of demographic change, including households that have been getting smaller for decades. Even a relatively small decline in average household size has a big impact on the number of new housing units required to shelter Canadians. For example, over the five years leading up to 2021, the average household size declined by 0.02 people. That was enough to raise the total number of households by 140,000 (or close to 30,000 a year). This trend will be responsible for just under 90,000 of the 730,000 new households created by 2024—and will provide a significant boost in housing demand.

HOUSEHOLD SIZE HAS BEEN SHRINKING FOR DECADES

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Tory announces 5-point plan to build homes faster, tackle affordability in Toronto

Toronto mayoral candidate John Tory has released a five-point plan to create more housing and address affordability challenges in the city.

Tory, who is seeking a third term, announced his first campaign policy about housing Tuesday morning, ahead of the municipal election in October.

“ I believe we need to get more housing built, we need to get more affordable and supportive housing built and we need to have housing that is obtainable for middle class Torontonians,” Tory told reporters while at a housing construction site in Toronto's Distillery District.

Toronto Mayor John Tory speaks during a press conference to update media on a tentative deal reached between the City of Toronto and the city's outside workers, in Toronto, Saturday, Feb 29, 2020. THE CANADIAN PRESS/Cole Burston

Tory’s plan consists of five pillars:

• Expanding housing options by permitting “missing middle” housing

• Cutting red tape and speeding up approval times by creating a Development and Growth Division

• Asking the province to allow the city to enact a “use it or lose it” policy for developers sitting on approved, but undeveloped, land

• Allocating a portion of city-owned land to be developed by non-profits

• Incentivizing the construction of purpose-built rental housing by reducing fees and charges

Tory says expanding “missing middle” housing will include legalizing laneway suites and garden suites, and exempting developments of four units or less from development charges.

“We also need to include the option to create duplexes, triplexes, as well as the kind of walk-up apartment buildings found in many pre-war neighbourhoods,” Tory said.

To speed up building approval times, Tory’s proposed Development and Growth Division would act as a “one-stop shop” to handle all aspects of development review and streamline the approval process. Tory said the division would also prioritize and fast-track the approval of purpose-built rentals.

“This will be a reorganization of existing staff in the spin cycle of housing applications, and thus bouncing back and forth between different divisions of the city government. The Development and Growth Division will allow us to be more nimble in getting projects approved,” Tory said.

To avoid developers from sitting on approved land, Tory said he wants to enact a “use it or lose it” policy that mandates developers to start building on unused land within a certain timeframe or face the consequences of higher taxes and expired zoning approvals.

In an effort to create more co-op, supportive and affordable housing, Tory said he wants to allocate a portion of city-owned land to be developed by non-profit organizations.

“Cooperative housing works and for some reason we back away. We, meaning all of the governments, back away from the use of it in previous years,” Tory said.

“If we can allocate the vacant land that we own as a city and encourage the other governments to do the same together with some of the other incentives we’ve been offering through programs like Open Doors and Housing Now…then I believe we will be able to build more supportive and affordable housing,” he added.

Mayoral candidate Sarah Climenhaga, who ran in the 2018 municipal election, commented on Tory's housing plan on Twitter and said "the will to actually remove housing barriers is what I don't see enough of."

"Hearing about housing is fine. What I care far more about than announcements is seeing housing created. It's important to understand where it is, and where and why it's not," Climenhaga tweeted Tuesday.

There are 31 candidates running in Toronto's mayoral race.

Voters are set to head to the polls on Oct. 24.

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Population Projections for Ontario

Population estimates (1971 to 2020) and projections (2021 to 2043), for Ontario.

By 2043, the total population in Ontario could range between 16,982,300 (Low-growth scenario (LG)) and 21,147,200 (High-growth scenario (HG)). Under the medium-growth scenario (M1), by 2043, the total population in Ontario would be 19,065,300, compared with 14,830,300 in 2021 (+28.6%)

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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Buyers Poised to Benefit from Moderating Prices and Reduced Sales Activity

GTA REALTORS® Release July Statistics TORONTO, ONTARIO, August 4, 2022 – There were 4,912 home sales reported through the Toronto Regional Real Estate Board (TRREB) MLS® System in July 2022 – down by 47 per cent compared to July 2021. Following the regular seasonal trend, sales were also down compared to June. New listings also declined on a year-over-year basis in July, albeit down by a more moderate four per cent. The expectation is that the trend for new listings will continue to follow the trend for sales, as we move through the second half of 2022 and into 2023.

Market conditions remained much more balanced in July 2022 compared to a year earlier. As buyers continued to benefit from more choice, the annual rate of price growth has moderated. The MLS® Home Price Index (HPI) Composite Benchmark was up by 12.9 per cent year-over-year. The average selling price was up by 1.2 per cent compared to July 2021 to $1,074,754. Less expensive home types, including condo apartments, experienced stronger rates of price growth as more buyers turned to these segments to help mitigate the impact of higher borrowing costs.

“The Greater Toronto Area (GTA) population continues to grow and tight labour market conditions will drive this growth moving forward. Despite more balanced market conditions resulting from rapidly increasing mortgage rates, policymakers must continue to take action to boost housing supply to account for long-term population growth. TRREB has put realistic solutions on the table to address the existing housing affordability challenges. With savings high and the unemployment rate still low, home buyers will eventually account for higher borrowing costs. When they do, we want to have an adequate pipeline of supply in place or market conditions will tighten up again,” said TRREB Chief Market Analyst Jason Mercer.

TRREB is also calling on all levels of government to reassess and clarify policies related to mortgage lending and housing development.

“Many GTA households intend on purchasing a home in the future, but there is currently uncertainty about where the market is headed. Policymakers could help allay some of this uncertainty. As higher borrowing costs impact housing markets, TRREB maintains that the OSFI mortgage stress test should be reviewed in the current environment,” said TRREB CEO John DiMichele.

“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals. The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs. Longer mortgage amortization periods of up to 40 years on renewals and switches should be explored,” said TRREB President Kevin Crigger.

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Higher borrowing costs continued to impact home sales in June 2022

TRREB FORECASTS CURRENT MARKET CONDITIONS TO REMAIN OVER SUMMER TORONTO, ONTARIO,

July 6, 2022 – Higher borrowing costs continued to impact home sales in June 2022. Sales totalled 6,474 – down by 41 per cent compared to last year’s strong result. The number of transactions was also down compared to May 2022, but this is often the case due to the seasonal nature of the market.

The average selling price, at $1,146,254, remained 5.3 per cent above the June 2021 level, but continued to trend lower on a monthly basis. The MLS® Home Price Index Composite benchmark was up by 17.9 per cent year-over-year, but also experienced a month-over-month dip compared to May.

Annual price growth was driven more so by less expensive market segments, including townhouses and condominium apartments. “Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein home buyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up.

Expect current market conditions to remain in place during the slower summer months. Once home prices stabilize, some buyers will re-enter the market despite higher borrowing costs,” said TRREB President Kevin Crigger. While the number of transactions was down year-over-year, the number of new listings was little changed over the same period. This has provided for more balance in the market, resulting in a more moderate annual pace of price growth. “Listings will be an important indicator to watch over the next few months. With the unemployment rate low, the majority of households aren’t in a position where they need to sell their home. If would-be sellers decide to take a wait-and-see attitude over the next few months, it’s possible that active listings could trend lower as well. This could cause market conditions to tighten somewhat, providing some support for home prices,” said TRREB Chief Market Analyst Jason Mercer. “Our region continues to grow because we attract people and businesses from all around the world. All of these people will require a place to live, whether they choose to buy or rent. Despite the shorter-term impact of higher borrowing costs, housing demand will remain strong over the long-term, as long as we can produce homes within which people can live. Policymakers at all levels need to make this their key goal,” said TRREB CEO John DiMichele.

Toronto GTA June Rent Report 2022

Q1 2022 Rental Market Report TORONTO, ONTARIO, April 21, 2022

Tight rental market conditions continued in the first quarter of 2022, pushing average rents closer to the pre-pandemic peak. Rental transactions were down year-over-year in the first quarter, largely due to the fact that rental listings dropped by an even greater annual rate. The result was increased competition between renters and double-digit rent increases. Greater Toronto Area (GTA) REALTORS® reported 10,110 condominium apartment rentals through TRREB’s MLS® System in Q1 2022 – down by 23.2 per cent compared to Q1 2021.

However, rental transactions as a share of listings was up on a year-over-year basis, suggesting that demand remained strong while the supply of available units dipped. “Immigration will be at or near record levels over the next two years. The number of nonpermanent residents, including students, will also increase. Many of them will turn, at least initially, to the rental market.

Investor-owned condominium apartments will be a key source of rental supply in the region. It is clear that rental demand is increasing relative to available units. While the homeownership market often dominates the headlines, policy makers also need to be cognizant about the need for rental housing supply as we move forward,” said TRREB President Kevin Crigger.

The average one-bedroom condominium apartment rent increased by 17.8 per cent to $2,145 in Q1 2022, from $1,820 in Q1 2021. The average two-bedroom rent was $2,867 in Q1 2022 – up by 17.2 per cent year-over-year compared to the average of $2,446 in Q1 2021. For perspective, the pre-pandemic peak in average rents was in Q3 2019, with the average one-bedroom rent at $2,262 and the average two-bedroom rent at $2,941. “Over the past year, we have seen an upward trend in average condominium apartment rents. This rebound in the rental market took hold as population growth accelerated throughout last year. Demand for rental accommodation is expected to remain strong this year and beyond, as job growth continues, immigration and non-permanent migration continues to support housing demand, and higher borrowing costs see some young people put their decision to purchase a home on hold,” said TRREB Chief Market Analyst Jason Mercer.

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SECOND HIGHEST FEBRUARY SALES ON RECORD

TORONTO, ONTARIO, March 3, 2022 – February home sales were down compared to the all-time record in 2021, but represented the second-best result for the month of February in history. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market.

Competition between buyers, however, remained tight enough to support double-digit price growth year-over-year. Greater Toronto Area (GTA) REALTORS® reported 9,097 sales through the Toronto Regional Real Estate Board's (TRREB) MLS® System in February 2022, representing a 16.8 per cent decrease in the number of sales compared to February 2021.

The supply of listings for low-rise home types (detached, semi-detached and townhouses) was also down year-over-year, but not by as much as sales. In the condominium apartment segment, particularly in Toronto, new listings were up in comparison to February 2021.

“Demand for ownership housing remains strong throughout the GTA, and while we are marginally off the record pace seen last year, any buyer looking in this market is not likely to feel it with competition remaining the norm. Many households sped up their home purchase and entered into a transaction in 2021, which is one reason the number of sales were forecasted to be lower this year and a trending towards higher borrowing cost will have a moderating effect on home sales.

Substantial immigration levels and a continued lack of supply, however, will have a countering effect to increasing mortgage costs,” said TRREB President Kevin Crigger. The MLS® Home Price Index Composite Benchmark was up by 35.9 per cent year-over-year in February. The average selling price for all home types combined was up by 27.7 per cent to $1,334,544. The pace of price growth varied by home type and region, but there was relative parity between low-rise and condominium apartment growth rates.

“We have seen a slight balancing in the market so far this year, with sales dipping more than new listings. However, because inventory remains exceptionally low, it will take some time for the pace of price growth to slow. Look for a more moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold temporarily as they re-situate themselves in the market,” said TRREB Chief Market Analyst Jason Mercer.

“We are close to provincial and municipal elections in Ontario. We know that housing affordability will be top of mind. Parties and individuals vying for political office must concentrate on bold and creative policies that will support increased and diverse housing supply to account for the current deficit and future population growth as immigration accelerates. History has shown that tax based policies pointed at foreign buying and speculative activity, which seem to be the political preference, have had very little impact on the market simply because this type of activity accounts for a small share of overall market activity,” said TRREB CEO John DiMichele.

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

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Lowest Number of Listings in Two Decades

TRREB UNVEILS KEY MARKET DRIVERS FOR 2022 AND JANUARY NUMBERS

TORONTO, ON, February 3, 2022 – The market outlook for 2022 is calling for strong home sales in the Greater Toronto Area (GTA) with the average selling price expected to hit a new record. The latest polling conducted for the Toronto Regional Real Estate Board (TRREB) by Ipsos shows detached homes are on the top of the list for buyers while the percentage of first-time home buyers will likely drop this year. Meanwhile, January began the same way December ended with home sales down.

Today, TRREB is releasing its much-anticipated 2022 Market Outlook and 2021 Year in Review report which includes an eagerly awaited forecast for sales and average selling price, the latest consumer polling results on home buying and selling intentions and joint research with the Toronto Region Board of Trade and Maru Public Opinion on post-pandemic back-to-work and employment scenarios.

Delve into the full report, The Post-Pandemic Future: Communities, Housing & Employment and discover highlights and key trends in our digital digest.

Market Outlook Summary

The following points summarize TRREB’s outlook for 2022:

• Total home sales reported through TRREB’s MLS® System in the GTA will reach 110,000, representing a dip from 2021, but still a strong result in comparison to previous years.

• The average selling price for all home types combined is set to climb to $1,225,000, an approximate increase of 12 per cent when compared to last year.

• In addition to labour market conditions and population growth, the prospect of multiple interest rate hikes by the Bank of Canada this year will be an important factor impacting housing markets in 2022. While BoC tightening cycles have historically led to fewer transactions, it is important to remember that home buyers have recently been held to a much higher qualification standard under the OSFI stress test. This could mitigate the impact of higher contract mortgage rates moving forward.

  “Immigration into Canada and the GTA is expected to be at or near record levels in 2022. All of these people will require a place to live. On top of this, job creation in average to above-average income sectors is expected to remain strong, further buoying consumer confidence to make a large-ticket purchase of a home. Unfortunately, the supply of listings will remain constrained, sustaining strong competition between buyers and double-digit growth in selling prices,” said TRREB President Kevin Crigger.

  “While home sales will remain strong historically, there are a few key factors that will see transactions slightly off last year’s record pace. First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold. Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller. Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can’t buy what’s not available for sale,” added TRREB Chief Market Analyst Jason Mercer.

Latest Ipsos Consumer Polling Results

The latest consumer polling by Ipsos supports TRREB’s forecast for 2022, including the following points:

• Overall buying intentions for 2022 have dipped relative to previous years. However, the share of those who indicated that they are very likely to buy in 2022 remained in line with the last number of years. The bottom line is that those who are fully committed to a home purchase will do so in 2022, whereas some of those on the fence may put their decision on hold.

• Detached houses remain most popular with intending buyers, especially in suburban areas. In the City of Toronto, a higher share of intending buyers will be focussed on condominium apartments and higher density low-rise home types.

• Overall, the percentage of first-time buyers is likely to drop. The dip will be driven by lower intentions in the suburban 905 area code regions surrounding Toronto. In the ‘416’ area code, first-time buyer activity could actually increase compared to last year. This likely follows the resurgence in condominium apartment demand we experienced in 2021.

• The share of existing homeowners very likely to list their home for sale in 2022 will be down for the GTA, including both Toronto and surrounding suburban regions. Listing intentions are down more so in the ‘905’ area codes. Given sales above the demographic norm over the past year, it makes sense that listing intentions are down. In addition, there still exists a vicious circle where homeowners will decide not to list because they fear they will not be able to find another home that meets their needs.

• Ipsos also looked at home buying intentions for those respondents who had immigrated to Canada. Home buying intentions for 2022 are higher amongst immigrant households and so too is the intended purchase price. This is important given that net population growth in the GTA is driven by immigration.

  January 2022 Home Sales Dip from Last Year’s Record Result

• There were 5,636 sales reported through the TRREB MLS® System in January 2022 – down by 18.2 per cent compared to 6,888 sales in January 2021. While sales were down substantially compared last year’s record result, the January 2022 result was the second best in history for the month. This result is in line with TRREB’s forecast for a strong sales result in 2022, but off the 2021 record.

• New listings were down by a similar annual rate (-15.5 per cent) as sales. Because sales and new listings moved in relative lockstep, active listings at the end of January amounted to 4,140 – down by 44 per cent to the lowest level in more than two decades.

• The continuation of tight market conditions resulted in a 33.3 per cent annual increase in the MLS® Home Price Index Composite benchmark. Similarly, the average selling price was up by 28.6 per cent year-over-year to $1,242,793.

“It is clear that 2022 is starting off the way 2021 ended in terms of the relationship between demand and supply in the GTA housing market. We have provincial and municipal elections this year in Ontario. These are the levels of government whose policies impact real estate development the most. With this in mind, it will be very important for voters to understand exactly what parties and individuals vying for public office propose to do to alleviate the lack of inventory and housing choice in the GTA in the years to come,” said TRREB CEO John DiMichele.

Navigating the New Normal

TRREB’s joint research with the Toronto Region Board of Trade and Maru Public Opinion brings together insights from both business executives and workers on what the “new normal” may look like and how real estate needs, employment and work patterns may shift in response.

A summary of results are as follows:

• There is a need for a hybrid of flexible post-COVID working arrangements.

• Downtown core offices may not need to accommodate as many people as before COVID as a result of continued working from home.

• Policies may need to balance the desire to keep working from home while also making use of the office.

• There are many implications for real estate and related infrastructure like transit and economic activity including ancillary spending on retail that will need to be considered in more detail.

  “Employers and workers are navigating what the emerging world of work will look like, including evolving corporate cultures and developing hybrid work patterns,” said Craig Ruttan, Policy Director, Energy, Environment and Land Use at the Toronto Region Board of Trade. “While offices will remain vital meeting places for many companies, their purposes and function will evolve to respond to workers’ priorities.”

If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out. 

If you found this article helpful please hit "Like" and "Share".

#realestatemarketreport #royallepage #torontoliving #toronto #thejunction #highpark #bloorwestvillage #swansea #homesellers #homebuyers #realestatebroker #lubabeleybroker #sellingrealestate #sellingtorontohomes #serviceyoucantrust #workingforyou #lubabeleyrealestateservices #royallepagebroker