May 2023 Market Review

The Toronto Regional Real Estate Board recently released its May Market Report. From my perspective, it contained no surprises: supply is still tight, there are lots of active buyers out there, and as a result prices are quickly approaching pre-correction levels – all stuff that I could see at ‘street level’. Here’s a quick look at some numbers, below which I’ll make a few comments.

Sales  +24.7%
New Listings  -18.8%
Active Listings  -23.1%
Average Price  -1.2%
Avg. LDOM  +16.7%
Avg. PDOM   +11.1%

Naturally, an increase and sales combined with a decrease in supply is going to result in upward pressure on prices. Comparing the average price today to the average price pre-correction is like trying to hit a moving target, but we can still clearly see that the average sale price has quickly recovered and is approaching par. I think it won’t be long until we pass that level – notwithstanding the recent rate hike.

On that note, there seems to have been a fair bit of doom and gloom in the media (although there’s also this more upbeat piece) about the latest hike, but I’m not sure that’s warranted. Most buyers have priced in the rate hikes, and another 25 basis points isn’t likely to scare off many of them. Plus, there are already work-around strategies being put into place by savvy mortgage brokers – e.g. take a shorter term mortgage (e.g. 1 to 3 years instead of the usual 5 years) and bet on rates coming down – at least a bit – sooner rather than later. If you are up for renewal, or are an active buyer, talk to your lender about some options, and let me know if you’d like to speak to one of my preferred mortgage professionals.

The highest average sale price last year was in February, when it hit $1,334,544. Let’s look again at average price movement over the last several months:

August (2022) –  $1,079,500

September – $1,086,762

October – $1,089,428

November – $1,079,395

December – $1,051,216

January (2023) – $1,038,668

February – $1,095,617

March – $1,108,606

April – $1,153,269

May – $1,196,101

The market was flat through the late summer/fall, took the usual ‘seasonal dip’ over December-January, and has been trending upwards since then. The average sale price in May was over $100k above August, which is not insignificant – and despite the ongoing rate increases over that time. That said, we are still about 9% below that February level (although that was a short-lived peak).

It’s entirely possible that the latest hike will cause some buyers to pause, but I’m doubtful that it will have a large impact; it’s just as likely that the market will continue as it has been going over the last few months. The summer months are usually quieter, as folks turn their attention to summer fun, cottage time, etc., so we’ll have to carefully read the tea leaves to determine what’s seasonal, and what’s rate-related.

As always, I’d love to hear any feedback you have. What are your thoughts about the real estate market? Do you see yourself buying or selling this year? Reach out any time!