When December rolls around each year, we have a tendency to consider data for year-end results, and that is appropriate. However, it is also important to think of it as a separate month, as you would any other. For that reason, we need to look at it individually and how it fits into the bigger picture of what has gone on in the real estate market as well as how to project the upcoming months.
Did Sales Increase or Decrease?
The Toronto Regional Real Estate Board (TRREB) compared December 2022 with the same month last year. Sales decreased year over year, active listings were higher, and days on the market doubled. This has affected the selling prices of real estate in the Greater Toronto Area, with average prices at least 9% lower but with greater decreases in various areas of the GTA up to 20% to 25% lower. This is why realtors, appraisers, and lenders are all seriously concerned.
The general opinion is that prices have still not bottomed out. If these trends continue, many investors will shy away from real estate for income purposes. Homeowners will be less likely to place their homes up for sale. For those who stay in the field of real estate hoping to stockpile some revenue, this looks pretty glum and anticipates losses, at least on paper.
At this point, homeowners are restrained from selling unless forced due to employment relocation or other issues, but if the economy continues downward, they may be forced to take a loss on their equity investment.
What Are the Long-Term Effects?
At the beginning of 2023, foreign buyers are banned from the purchase of Canadian properties, closing many doors that would ordinarily boost lagging sales. Everyone is waiting to see the longer-term effect of this restriction over the next couple of years. In addition, the Office of the Superintendent of Financial Institutions is expected to impose more restrictions on lenders. The full force of these decisions probably won’t show until late this year. Keep watch on the third and fourth quarters to see what happens.
Comparing 2021 vs. 2022
Now that we have explored the month let’s switch to some of the statistics from a comparison of 2021 and 2022. Sales are down 48%, but active listings increased by 169%. The average price decreased by only a bit over 9%. The length of time on the market jumped by nearly 93%. While this is bad, you need to realize that sometimes a piece of property is re-listed, which will start the clock anew. When you consider the full-time property has been offered for sale, this number jumps to 110%.
For those who make their livelihood in real estate, none of this bodes well. However, the industry has weathered downturns over the decades. Especially those who invest for the long term, riding the economic waves, are still able to make sound business decisions. The positive element is that there are still some good deals to be made if you are a cautious trader. Check with experienced mortgage brokers in Etobicoke, like easyhouseloan.ca, who can navigate the regulations and help buyers and sellers close on properties that will eventually bounce back to solid footing.