Buyers & Now Sellers Return To Toronto Real Estate Spring Market In 2023: Where Are Prices Headed?!
The Toronto real estate spring market is pretty hot right now, and you probably know that because it’s all over the news. And the main reason for this is that buyers have been coming back sooner than the sellers.
Those who were too scared to buy last year are finally taking the plunge, and it helps even more now that fixed rates are dropping and central banks are likely close to ending rate hikes.
Another buy signal is that there’s now pretty strong proof that we’ve found good support and a clear sign of a bottom with real estate in Toronto.
And so it leaves us with listings, which still haven’t been enough for our recovering market, but things could be changing. Recently, we’ve seen more homes hit the market for spring, and what this means is that it can help balance out the market.
In this video, I’ll give you a complete update on what’s going on these days and where Toronto real estate will go in the coming months.
Toronto Sales To New Listings Ratio
In Toronto, we know the competition is getting intense. You can see this by looking at the sales-to-new-listings ratio, which measures how hot the market is (the higher the number, the hotter the market).
Basically, what’s happening is that we’re reaching levels not seen since early 2022, which was when the market was red hot. So yes, offer dates are back, and multiple offers are back.
But even though the market sure feels similar, things are different, and the main thing is that buyers aren’t as aggressive. For example, even though there might be a double-digit number of offers on offer night, the seller might still end up accepting an offer with conditions or might not sell at all because they didn’t hit the price they wanted.
Don’t get me wrong. Things are definitely still selling, and prices are going up. It’s just that things are moving a lot more carefully these days.
Toronto Seasonality Trends
You might think the January and February price gains were pretty unusual, but they’re not as special as you might think.
Almost every year around these months, we see more people wanting to buy homes than those willing to sell, and so if you look at seasonality, prices usually go up faster in January and February. And once more spring listings come onto the market, sales do pick up, but the market and prices end up balancing out better.
And this is exactly what we’ve been seeing in January and February, and now the spring trend seems to align with history too. There are more homes hitting the market now that spring is here, which will definitely mean a lot more sales and activity, but we should also start to see more balance in the Toronto market and prices starting to stabilise again.
If we look at where prices are right now in Toronto, we’re actually midway between the peak set back in early 2022 and the lows that we were hanging around for seven months from July 2022 to January 2023.
The BoC signalling a potential pause in rates in January boosted buyer confidence, which definitely helped with the 15% rise in prices.
So right now, we’re 17% below the peak and 15% above the bottom, and it’s very possible to see prices hang around these levels until the summer.
Canada Real Estate Forecasts
What comes after is harder to tell. TD is suggesting that real estate sales in Canada have probably reached a trough and will pick up, but they also predict that prices for Canada as a whole might still have more room to drop before picking up again in a few years time. And the general consensus is similar for the rest of the big banks.
But here’s what you have to understand as well. They’re referring to Canada, and Toronto trends have been and are likely still going to be slightly different.
Only One of Canada’s Big Six Banks Expects Real Estate Prices To Rise#ToRe #VanRe https://t.co/UlX6rf0Hh4 pic.twitter.com/vcWtGMtGfY— Better Dwelling (@BetterDwelling) March 9, 2023
Toronto vs. Canada Real Estate Trends
Take a look at this chart that compares Toronto prices with those for the whole of Canada.
Toronto’s prices have come down much sooner and steeper, but they’ve also bottomed up much more quickly and have been showing a lot of support at bottom levels for 7 months straight.
Canada as a whole saw a much slower reaction and decline. The bottom could have been this past January, but right now it’s still pretty hard to tell, and I wouldn’t be surprised if prices drop more too.
Where Might We Be Headed?
Past trends are different, and we see future prospects as being pretty different too.
The big thing in Toronto is that we don’t have much more land to build on, even if we want to. So even if we see looser housing policies, it’s just a lot harder to create supply to meet demand compared to other parts of Canada with a lot more land.
The other part is that the COVID reversal is still happening, and we expect to continue to see more people wanting to move out of the rural areas and back to the city to work and play.
Honestly, if you ask us where prices will go in the short term, we can’t say for sure if they are for sure going to go up or slightly down in the short term, but we also suspect the big dips back down are behind us in Toronto.
But we’ve seen very solid support levels for over half a year in Toronto now, and fundamentals are looking especially good in Toronto because of our housing crisis and the COVID reversal.
And although there’s a possibility of a decline in prices in the short term, all banks’ long-term forecasts indicate an upward trend, so it is safe to say that real estate remains a secure long-term investment.
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