4 minute read
Market Commentary by Barry Cohen
Luxury buyers have returned to the GTA’s housing market … will listings follow?
After a volatile 2022, Toronto’s luxury housing segment has finally found its groove.
Sidelined buyers returned to the market in early spring, encouraged by lower fixed mortgage rates and overall market stability. New listings—while still down significantly yearover-year – showed some modest signs of improvement in the Greater Toronto Area (GTA), edging up to 11,364 between March and April. While challenges still exist for home buyers in terms of inventory (more than 18,000 properties were listed for sale this time last year), upward pressure on pricing is expected to draw some sellers into the market in the months ahead.
Despite the uptick in demand, sales in the Greater Toronto Area in the first four months of 2023 paled in comparison to year-ago levels. Fourteen hundred and seventy-five properties changed hands over the $2 million price point, down from a peak level of 3,621 recorded between January and April of 2022. Average price over $3 million held relatively steady, sitting at $3,999,506 year-to-date 2023, down just six per cent from $4,252,706 reported during the same period in 2022.
Further recovery is expected for the GTA housing market in the coming months, although supply issues will likely linger. New listings have edged upward month-over-month, but they remain well off year-ago levels. To illustrate, there are close to 1,100 homes listed for sale between $2 million and $2.999 million in the GTA – and drilling down deeper – only 356 are available in the 416-area code. Between $3 and $4.999 million, 457 homes are listed for sale in the GTA, while only 172 are listed in Toronto proper. Far greater selection is typical for this time of the year and many of the properties currently listed for sale have been on the market for an extended period.
Relatively healthy economic fundamentals should also support homebuying activity moving forward. Real GDP rose 0.5 per cent in January, registering a further increase of 0.1 per cent in February, according to Statistics Canada. Employment levels continue to be tight, with unemployment hovering at five per cent. Inflation appears to be falling, sitting at 4.3 per cent in March, down from 5.2 per cent one month earlier. Fixed rate mortgages have been dropping, with some lenders now offering five-year, and in some instances, three and four-year terms under five per cent. The Bank of Canada is expected to continue it’s pause on interest rate hikes in the next meeting. Against this backdrop, residential housing markets across the country should perform relatively well.
While stock market performance has been unstable as of late, the failure of several US banks in March, April and May sent shockwaves through global financial communities. Not surprisingly, when banks fail, as they did in 2008 and 2009, investors tend to turn their attention to housing markets and the security of a tangible asset. We suspect that 2023 will be no different.
While luxury sales were down year-over-year, the number of homes that changed hands over $3 million this year continues to climb month over month suggesting that the activity that has occurred in the lower end of the market, is working its way to the luxury price points. This point is further reinforced in the ultra high-end, with half of the year’s sales over $7.5 million occuring in just the last 30 days. There is a lot confusion and mixed messaging going on, with pundits seemingly two months behind. Thankfully I’ve been through a transitioning market like this before and am excited for what the year ahead will bring. If you’d like to chat about a home buying or selling strategy or would like to get on our exclusive list to be notified of what we will be listing in the near future, please feel free to reach out to us at any time at 416-223-1818. Hope you enjoy the great weather!
Best,
Barry Cohen
