October 2023 Newsletter

From the Toronto Regional Real Estate Board:

Despite the heat of the summer, the real estate market showed signs of cooling in the month of August in the Greater Toronto area. While the end of summer is historically quieter, the changes in selling price, days on market, and number of sales all suggest that the slowing was more than typical seasonal adjustment, and that real estate is heading toward a balanced market for the first time in years. 
So while prices were up 1% from July, they were down 10% since May. The Spring surge in prices does not seem to have held. Overall, prices of all home types are up 5% year over year. 
A similar picture is seen when considering the number of homes that are selling versus the number of new listings: sales in August were down 12% over last year, while new house listings were up 17%. Active listings were up 27% over last year. Not surprisingly, days on market are also increasing. 
You might be wondering why so few listings are sold in August? Two words: mortgage rates. When the Bank of Canada raised rates again in June, buyer confidence was shaken. The open-ended nature of the interest rate policy left the door open for future rate increases - something that gun-shy buyers dreaded. With market uncertainty at an all time high, buyers froze in their tracks. 
The increase in interest rates also explains in part why there was such a jump in new listings: investors relying on tenants to cover carrying costs on their investment properties began to find themselves in negative cash flow situations. Simply put, rents could not cover the enormous jump in mortgage payments. Investors have begun to unload their properties, adding to the number of listings available. 
What lies ahead for the Fall real estate market?
The average sale price of homes this Fall is going to be largely dependent on the delicate balance between sales and new listings. If the number of listings increases and the number of sales decreases, sellers can expect some downward pressure on resale prices. 
On a brighter note, the number of new Torontonians is steadily increasing, with an anticipated population of nearly 6,000,000 in the GTHA by 2025. There is a housing shortage of tens of thousands of units that will continue to buoy prices for the foreseeable future. Demand continues to outstrip supply, despite seemingly gloomy August stats.

Analysis: What this means for York Region’s home sellers and buyers.

From my recent experience representing both sellers and buyers, the real estate market has turned into a beauty contest. In any given neighbourhood, there is only one, or possibly two, sales a week. These homes won the contest, and unfortunately there are no “runner up” or consolation prices. With more inventory to choose from, buyers are getting more selective about which homes they are willing to submit an offer on. The “winner” homes frequently receive multiple offers, while the “losers” sit on the market for as many as 45 days. 

What makes the difference between a winner and a loser in this market? Read my latest blog, “Beauty Queens & the Real Estate Market,” where you can read what sells homes in this market.