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High rates further slow GTA real estate in September

September 2023 TRREB recap

The early fall GTA real estate market is typically a bustling one, as buyers look to square away their deals before the onset of the holidays. However, it’s evident that tougher borrowing costs were keenly felt this September throughout the Greater Toronto Area markets, with sales down on both an annual and monthly basis.

According to the latest data from the Toronto Regional Real Estate Board (TRREB), a total of 4,642 transactions occurred over the course of the month, marking a -7.1% decline from the same time period in 2022, and -12.3% below August activity.

Buyers who were out in force enjoyed slightly more balanced conditions than in previous months, as new supply is finally coming to market; a total of 16,258 homes were newly listed, a robust 44.1% uptick from last September’s historically tight inventory. On a monthly basis, that number reflects a 32% increase.

Fresh pickings weren’t enough to offset price growth in the region, though, with the average coming in at $1,119,428, marking a 3% increase and dollar difference of $36,932 from last year’s low. Compared to August, prices rose by 3.4%.

“GTA home selling prices remain above the trough experienced early in the first quarter of 2023. However, we did experience a more balanced market in the summer and early fall, with listings increasing noticeably relative to sales. This suggests that some buyers may benefit from more negotiating power, at least in the short term. This could help offset the impact of high borrowing costs,” said TRREB Chief Market Analyst Jason Mercer.

Overall supply also appears to be stabilizing with 18,912 active listings currently for sale, up 39.8% from last year and 22% more than in August.

GTA real estate awaits Bank of Canada’s next move

Buyer appetite and sellers’ willingness to participate in the market continue to hinge on rising mortgage rates, and whether the Bank of Canada intends to increase them further. The central bank opted to leave its trend-setting Overnight Lending Rate unchanged in its most recent announcement on September 6th, leading to tentative hope that it will continue to do so for the remainder of 2023, before lowering rates in the second half of 2024.

Recent economic data have sent mixed messages, however; markets were put on edge after a stronger-than-expected inflation reading of 4% in August, while a soft July GDP report could bolster rationale for a rate hold. The Bank’s upcoming announcement on October 25 will be key in how real estate demands plays out for the remainder of the year.

“The short and medium-term outlooks for the GTA housing market are very different. In the short term, the consensus view is that borrowing costs will remain elevated until mid-2024, after which they will start to trend lower. This suggests that we should start to see a marked uptick in demand for ownership housing in the second half of next year, as lower rates and record population growth spur an increase in buyers,” said TRREB President Paul Baron.

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Demand is down across all home types

Sales slowed across all home types, with the largest declines in the semi-detached and townhouse segments, with a total of 402 (-19.24%) and 741 (-10.2%) sales, respectively. Detached home sales are still leading the market in terms of volume with 2,149 homes trading hands, down -7% year over year. Condos, meanwhile, saw their positive sales trend reverse in September, with year-over-year transactions roughly flat at 1,307 sales (-0.2%). 

Condos were also the only home type to see a decline in price, with units coming in at an average of $707,065 (-3.3%), while all other home types saw modest price increases between 4.5 - 5.2%.

TRREB September sales and data by home type.

Sales down the most in 905-area markets

The majority of sales declines in September were seen in the regional markets outside of the City of Toronto; a total of 2,898 homes traded hands in those markets, marking an -11.2% decline from last year. Sales within Toronto, meanwhile, were flat at 1,744 (0.6%).

Though both regions had very similar sale prices, the city experienced stronger price recovery, with an average selling price of $1,119452 (up 5.2%), compared to the 1.8% in the 905 at $1,119,414. Meanwhile, new listings surged to similar extents in both markets, up 45% in the City, and 43.3% in the 905.

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