The Toronto Regional Real Estate Board reported that home sales are down by 47% when they compare 2022 to last year. Even taking into consideration that home sales drop during the summer months, July 2022 is down 4% from June of this year. It is not all bad news. Housing prices are higher this year than they were last year at this same time. Less expensive homes, including condos, saw a rise in prices. With tight lending rates, these residences are more affordable and more attractive to buyers.
The Number of Listings in the GTA
Comparing the two years, while the sales may be trending downward, the number of listings in the GTA are still high and quite active. We note that the average sale price has held steady. However, the properties are on the market for a somewhat longer period of time than normal.
At this point in time, the market is being considered balanced. The Bank of Canada has increased the prime rate, which may take six to eight months to trickle down until the full effect settles on GTA. In Toronto West (Etobicoke), we are looking at detached and semi-detached properties and seeing that the average prices have significantly declined from their high in February 2022. Single home sales prices are only a bit lower but condominium prices have increased at a moderate level. Looking back two years, the condo prices were more impacted during the height of the pandemic than detached houses.
The General Economy
You may be asking why any of this is important. First, it is one of the indicators that the financial gurus look at to determine the status of the country’s economy. High unemployment means less disposable income for “extras”. The general economy also determines the amount of cash available for loans and the rates at which it is lent. Higher lending rates (higher interest on mortgages) discourage buyers.
Sellers
With fewer buyers available, sellers are willing to accept lower prices for the sale of their homes. There is less competition between buyers and the seller will probably take what they can get. This is considered a buyers’ market as opposed to a sellers’ market when bidding wars can drive up the sale price of a home.
The other option is for the seller to hold onto the property until mortgage money is more available and at lower interest rates. This will create a stockpile of homes ready to go on the market as soon as the economic situation eases.
With the growing population in the Greater Toronto Area, including Etobicoke, the federal government has the responsibility to maintain a stable economy as well as assure homeowners that they will be able to stay in their current homes despite rising mortgage rates. Some suggestions include extending mortgage terms to 40 years rather than the more common 30 years, which allows the monthly payment to be lower and, thus, more affordable to the average citizen.
The Bottom Line
At this point, there are still good properties available on the market. As a buyer, if you can deal with the financing, there are some very good bargains to be had. As a seller, you can still expect to get market value for a while.