Are Greater Toronto real estate prices past the bottom? Toronto Regional Real Estate Board (TRREB) data shows the composite benchmark, or typical home, saw prices surge higher in March. Home sales remain weak despite the pop, and experts don’t see that changing in the near term. However, buyers in the market sent prices much higher for a second month in a row.
Greater Toronto Real Estate Prices Jumped $27k In A Month
Just a year after interest rate hikes, Greater Toronto home prices are ripping higher. The TRREB benchmark popped 2.5% (+$27,200) higher to $1,118,500 in March. A similar surge was observed in the City of Toronto, where its benchmark hit $1.101 million, up 2.2% (+$24,100) from a month prior. For context, growth for the single month was greater than the annual Bank of Canada (BoC) inflation target.
Greater Toronto Real Estate Are Off The Peak
The composite benchmark price of a home across Greater Toronto.
Source: TRREB; Better Dwelling.
Greater Toronto Home Prices May Have Bottomed
Greater Toronto real estate prices are still down significantly, but the trend might be turning. Over the past 12-months, prices are down for both TRREB (-16.2%; -$216,200), and the City of Toronto (-13.2%; -$167,500). However, the steepest of the 12-month contraction is now behind us, with prices accelerating by roughly 1 point for each of the respective benchmarks.
Greater Toronto Real Estate Price Growth Is Decelerating
The 12-month percent change for the composite benchmark price of a home across Greater Toronto.
Source: TRREB; Better Dwelling.
Greater Toronto Home Sales Contract And Aren’t Expected To Bounce
The reason for the climb in prices wasn’t due to a surge in home sales by any measure. Greater Toronto existing-home sales fell 36.5% to 6,896 units in March. That’s significantly lower than last year, coming in at the lowest level in at least 5 years.
Experts don’t see a major change when it comes to sales. Despite these early signs that the Toronto real estate market is stabilizing, the level of sales remains well below its historical average, having declined by 49.8% from their last peak in February 2022,” said Daren King, an economist at National Bank of Canada (NBF).
Adding, “…the likelihood of a recovery in the housing market remains low as we expect the Bank of Canada to keep its policy rate at the current restrictive level for most of 2023. As a result, sales are expected to remain below their historical average in the coming months.”
Existing-Home Inventory Is Pulling Back
Inventory is pulling back, likely as sellers note the loosening credit conditions. King points to new listings falling roughly 10% in March, following a 24% pullback in February. This has helped active, or total, listings pullback 21%, as buyers eat away at existing inventory.
“As a result, market conditions in Toronto, defined by the active-listings-to-sales ratio, are slightly tighter than the historical average,” explains King.
Canada’s moral hazard-driven real estate market has adopted the mindset that a weak economy is good for home prices. While King might be right about sales stagnating for most of the year, the global banking crisis has investors eyeing easy credit conditions. The narrative is now that an economic slowdown will ramp up home prices as the state tries to stimulate cheap growth. At this point, it’s not exactly clear if they’re wrong.