Home sales
in the Greater Toronto Area is off to a weak start, according to January
statistics published by the Toronto Regional Real Estate Board (TRREB) on
Friday.
January saw a
grand total of 3,100 home sales across the GTA, which was just a silver less
than the 3,110 sold in December. Although the winter months are typically
slower, this represents a 44.6% decrease when compared to the 5.594 homes sold
in January 2022.
The gap can
be attributed in large part to declining sales within the City of Toronto,
which totaled 2,235 in January 2022, but just 1,108 in January 2023 – a 50.4%
decrease. Meanwhile, sales outside of the city fell 40.7%, from 3,359 to 1,992.
New listings,
however, remained steady. January saw 7,668 new listings in the region – a small
3.7% decreased, TRREB data reveals, was fairly even between the City of Toronto
and the rest of the GTA.
The Market
Lean
What does
all of this mean? Where is the market headed?
With the
aforementioned statistics, we can determine the sales to new listings ratio,
which serves as a quantitative indicator of whether the market is leaning
towards buyers or sellers. A ratio below 40% is usually considered a buyers’
market, while a ratio above 55% is viewed as favoring sellers, and anything in
between a sign of market balance.
With 3,100
home sales and 7,668 new listings recorded in January, the sales to new listings
ratio is 40.4%, indicating a buyer’s market. This is a noticeable shift from
December where there were 3,110 home sales and 4,074 new listings were registered,
resulting in a ratio of 76.3%.
A second
quantitative indicator is the sales to active listings ratio, where a ratio
below 12% is considered a lean towards buyers, above 20% a lean towards
sellers, and anything in between indicating balance.
With 3,100
home sales and 9,299 active listings as of January, the sales-to
active-listings ratio is 33.3%. However, December saw 3,110 home sales and
8,692 active listings, for a ratio of 35.8%, indicating that the market is
moving in the direction of buyers.
Prices
Have Found Support in Recent Months
The average selling
price in January was $1,038,668 – down 16% compared to January 2022 but not
significantly changed from the $1,051,216 average seen in December.
“Home sales
and selling prices appear to have found some support in recent months,” said
TRREB President Paul Baron. “This coupled with the Bank of Canada announcement
that interest rate hikes are likely on hold for the foreseeable future will
prompt some buyers to move off the sidelines in the coming months.”
“Home prices
declined over the past year as homebuyers sought to mitigate the impact of
substantially higher borrowing costs,” added TRREB Chief Market Analyst Jason
Mercer. “While short-term borrowing costs increased again in January,
negotiated medium-term mortgage rates, like the five-year fixed rate, have
actually started to trend lower compared to the end of last year.”
A tight
labour market and strong population growth are expected to keep demand for
housing strong, and TRREB points to policies like Mayor John Tory’s 2023
Housing Action Plan that are striving to increase supply, which could subsequently,
and hopefully, bring improved affordability.