MARKET CONTINUES TO BALANCE OUT AS BORROWING COSTS TREND HIGHER

The housing market in the Greater Toronto Area (GTA) has continued to change as a result of increased interest rates. May 2022 sales were down on a monthly and annual basis, similar to April's numbers. Active listings, on the other hand, were up month over month and year over year at the end of May. Buyers now have more negotiation leverage thanks to more balanced market conditions. As a result, while benchmark and average home prices increased significantly year over year, selling prices decreased month over month.

"Rate hikes by the Bank of Canada, including the 50-basis-point hike on June 1, have a short-term impact on property buyers. Potential purchasers are now waiting for a price bottom, which is a psychological factor. This is expected to persist throughout the summer. Housing demand will be underpinned by extremely low unemployment, significant job vacancies, rising salaries, and record immigration as home purchasers adjust to higher borrowing rates, according to TRREB President Kevin Crigger.

In May 2022, GTA REALTORS® reported 7,283 sales through TRREB's MLS® System, down 38.8 percent from May 2021 and nine percent from April 2022. The number of new listings in May was similar to last year's level and increased month over month. The number of active listings increased by 26% year over year, despite sales being down and new listings being flat to slightly up.

Market conditions were still tight enough to support an overall average selling price of $1,212,806 in May 2022, reflecting a 9.4% yearly increase. The MLS® Home Price Index Composite Benchmark increased by 23.9 percent year over year. Both price measures were down month over month, indicating more balanced market conditions.

"Price trends observed over the past three months – both in terms of slowing yearly growth rates and recent month-to-month declines – are consistent with TRREB's prediction for 2022. Following a solid start to the year, the current rate tightening cycle has altered market dynamics, with many potential house purchasers deferring their purchase. "As a result, the market has become more balanced, giving buyers more bargaining power," said TRREB Chief Market Analyst Jason Mercer.

"Recent elections have demonstrated that senior government officials recognise the need for greater housing to sustain regional prosperity. New and more diverse dwelling styles are approved at the municipal level, in accordance with provincial rules and regulations. As we approach the municipal elections in the autumn, it will be critical to grasp the positions of local politicians. Higher interest rates will not have an indefinite effect in the short run. "Long-term supply remains a challenge," stated TRREB CEO John DiMichele.