GTA Market Update

Increased lending expenses, ongoing economic uncertainty coupled with decisions made by the Bank of Canada, and limited housing inventory collectively led to a decrease in home sales in August 2023 when compared to the same month in 2022. The average selling price remained relatively stable during this period. When considering adjustments for seasonal variations on a monthly basis, both sales and average prices experienced a slight decline.

In August 2023, Greater Toronto Area REALTORS® recorded 5,294 sales, marking a 5.2% decline compared to the same month in 2022. There was a notable increase of 16.2% in new listings year-over-year, which offered some relief in terms of housing supply. However, when looking at year-to-date data, listings remained significantly lower than the same period the previous year. When adjusting for seasonal variations, sales experienced a slight one percent month-over-month decrease compared to July 2023, while new listings saw a modest 1.3% increase compared to July.

“More balanced market conditions this summer compared to the tighter spring market resulted in selling prices hovering at last year’s levels and dipping slightly compared to July. As interest rates continued to increase in May, after a pause in the winter and early spring, many buyers have had to adjust their offers in order to qualify for higher monthly payments. Not all sellers have chosen to take lower than expected selling prices, resulting in fewer sales,” said TRREB Chief Market Analyst Jason Mercer. 

Some areas of GTA saw slightly buyers' market, where there were no competition and buyers were able to negotiate price and terms during transactions.

In August 2023, the MLS® Home Price Index Composite benchmark increased by 2.5% compared to the previous year. Similarly, the average selling price showed a slight uptick, though it was less than 1%, reaching $1,082,496 during the same period. However, when considering seasonally adjusted month-to-month figures, the MLS® HPI Composite benchmark remained relatively stable, while the average price saw a slight decrease of 1.6%.

“While higher interest rates have certainly impacted affordability, the prospect of higher taxes will also hit households’ balance sheets, especially younger buyers with limited savings. With the City of Toronto moving to raise the municipal land transfer tax (MLTT) rate on properties over $3 million as a revenue tool, it must also consider helping first-time home buyers struggling to enter the market by adjusting their tax rebate threshold to reflect today’s higher home prices,” said TRREB CEO John DiMichele.

“Looking forward, we know there will be solid demand for housing – both ownership and rental – in the Greater Toronto Area and broader Greater Golden Horseshoe. Record immigration levels alone will assure this. In the short term, we will likely continue to see some volatility in terms of sales and home prices, as buyers and sellers wait for more certainty on the direction of borrowing costs and the overall economy,” said TRREB President Paul Baron.

Inflation remains a concern, with CPI rising to 3.3% in July after hitting 2.8% in June, averaging close to 3%. Gasoline price increases are expected to keep inflation elevated temporarily. Core inflation, measured year-over-year and over three months, is around 3.5%, showing little recent decline. Prolonged high inflation poses risks to price stability.

The Canadian economy is currently experiencing slower growth as a means to alleviate inflationary pressures. Despite a contraction of 0.2% in the second quarter of 2023, the central bank has kept the policy interest rate at 5% on September 6, 2023, while closely monitoring factors such as inflation, wage growth, and corporate pricing behavior to ensure price stability for Canadians.