December 2023 Real Estate Market Review

The December and year-end 2023 real estate statistics for the Greater Toronto Area (GTA) reflect a challenging market influenced by various factors, including record immigration and affordability issues. Here are some key points from the release:

Overall Demand and Rental Market Focus:

  • The demand for housing in the GTA remained strong in 2023, primarily driven by record immigration.
  • However, a significant portion of this demand shifted towards the rental market, likely due to challenges in the home ownership market.

Home Sales and Affordability Issues:

  • The number of GTA home sales in 2023 was less than 70,000, a decrease attributed to affordability issues arising from high mortgage rates.
  • Affordability challenges were exacerbated by unrealistic federal mortgage qualification standards.

Borrowing Costs and Future Outlook:

  • High borrowing costs and stringent mortgage qualification standards made home ownership unaffordable for many households.
  • The new TRREB President, Jennifer Pearce, expressed optimism, anticipating a relief in 2024 as borrowing costs are expected to trend lower. This, coupled with a resilient economy, may lead to a rebound in home sales.

MLS® System Activity:

  • There were 65,982 home sales reported through TRREB’s MLS® System in 2023, representing a 12.1% decrease compared to 2022.
  • Despite an increase in sales during the spring and summer, the number of new listings declined in 2023, posing a challenge in the face of a growing population.

Average Selling Price:

  • The average selling price for all home types in 2023 was $1,126,604, reflecting a 5.4% decline compared to 2022.
  • On a seasonally adjusted monthly basis, the average selling price edged higher, while the MLS® Home Price Index Composite edged lower.

Buyers’ Market and Negotiation Opportunities:

  • Buyers in the market in 2023 had more choice, allowing them to negotiate lower selling prices.
  • The expectation is that if borrowing costs decrease in 2024, the market conditions may tighten, leading to renewed price growth.

Population Growth and Housing Availability:

  • Record immigration into the GTA in the coming years is anticipated to necessitate an increase in the number of homes available for rent or purchase.
  • The TRREB CEO, John DiMichele, emphasized the importance of providing people with the certainty of stable and affordable housing as the population continues to grow.

In summary, the GTA real estate market in 2023 faced challenges related to affordability, but there is optimism for improvement in 2024 with expected lower borrowing costs and a more stable economic outlook. The need for increased housing availability, especially in response to record immigration, is recognized as crucial for the future stability of the market.

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