The real estate market in the Greater Toronto Area (GTA) is taking some baby steps towards attaining a balance; still, home prices continue to jump as more buyers are battling over the few available homes.
Toronto’s housing market had a record-breaking sales year as at 2021 and hasn’t slowed down in the start of 2022, with the average price in the Greater Toronto Area reaching $1.24 million in January.
The Toronto Regional Real Estate Board (TRREB) says sales fell 16.8 % in February, unlike February 2021. Despite the slowdown, it insisted that this was the second-busiest February on record.
According to the data released earlier on Thursday by TRREB, this amounts to a nearly 7% increase month-over-month and a 28 % increase over last January.
TRREB also said on Thursday that home prices across the Greater Toronto Area surged almost 28 % in February from a year earlier. However, a slower decline in listings than sales indicated a “modest move to a slightly more balanced market.”
“The rate of demand for ownership housing remains strong throughout the GTA, and while we are marginally off the record pace seen last year. Any home buyer looking in this market is not likely to feel it with competition remaining at the same level,” said TRREB president Kevin Crigger.
Looking towards the remaining months of 2022, TRREB is anticipating a stronger-than-normal year. Total home sales in the GTA might possibly reach 110,000, which would be a dip when compared to last year, though still a robust market in a historical sense.
In a press release, the TRREB president Kevin Crigger said, “The rate of immigration into Canada and the GTA is likely to be at or near record levels in 2022.
All of these immigrants will require a place to live; unfortunately, the supply of listings will remain constrained, sustaining intense competition between buyers and double-digit growth in selling prices.
With an election in Ontario looming, TRREB calls for an increased housing supply to keep up with demand as immigration ramps up instead of taxes on foreign buyers and speculators.
However, on the demand side of the market, TRREB chief market analyst Jason Mercer says they expect transactions to drop off slightly from the pace seen in 2021, as factors like rising borrowing costs will prompt some prospective buyers to put their purchases on hold.
“Higher borrowing costs will likely have a “moderating effect” on the sales of homes this year, with price growth gradually coming in the second half of this year, although substantial immigration and a continued supply shortage are likely to have a countering effect,” TRREB said.
The Bank of Canada raised its benchmark interest rate to 0.50 % from a record low of 0.25 % on Wednesday. It said they would need to go higher, hinting at a further increase next month.
Later this year, the anticipated rate hikes are not likely to draw in a large wave of would-be buyers as the home buyers seek to lock in lower rates.
Last week, market watchers told the Financial Post that most of these movements have already taken place.
