Market Watch - March 2023

The Greater Toronto Area (GTA) housing market conditions have been tightening over the past few months, as demand for housing continues to increase. Sales accounted for a higher percentage of listings in March 2023 than in March 2022, indicating that competition between buyers is intensifying. Additionally, the average sale price was above the average list price for the first time in almost a year.

According to the Toronto Regional Real Estate Board (TRREB) President, Paul Baron, "As we moved through the first quarter, TRREB members were increasingly reporting that competition between buyers was heating up in many GTA neighbourhoods. The most recent statistics bear this out. 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."

GTA REALTORS® reported a total of 6,896 sales through TRREB's MLS® System in March 2023, which represents a decrease of 36.5% compared to March 2022. However, both actual and seasonally adjusted sales were up on a month-over-month basis. New listings were also down on a year-over-year basis, pointing to tighter market conditions compared to last year.

Despite the decrease in sales, the TRREB Chief Market Analyst, Jason Mercer, noted that lower inflation and uncertainty in financial markets have resulted in medium-term bond yields trending lower, resulting in lower fixed rate borrowing costs this year. Lower borrowing costs will help with affordability, particularly as tighter market conditions exert upward pressure on selling prices in the second half of 2023.

The MLS® Home Price Index composite benchmark was down by 16.2% on a year-over-year basis, but up on both an actual and seasonally adjusted month-over-month basis. Similarly, the average selling price was down by 14.6% year-over-year to $1,108,606, but up on an actual and seasonally adjusted month-over-month basis.

As population growth continues at a record pace due to immigration, first-time buying intentions are expected to remain strong. However, the number of homes for sale is anticipated to remain low, making it crucial to have substantial rental supply available. Unfortunately, this is not something that is currently available, and there is a need for a policy focus on bringing more purpose-built rental units online over the next few years, according to TRREB CEO John DiMichele.

Overall, the GTA housing market is facing tighter market conditions due to increasing demand for housing and low inventory levels. However, lower borrowing costs and a strong intention among first-time buyers to own property will continue to drive the market forward. It will be important to monitor market trends and supply levels in the coming months to fully understand the impact on the market.

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