Is there stability in the Toronto Real Estate Market?

By: Zan Molko

Is there stability in the Toronto Real Estate Market?

Tags: 4 Months of flat prices?

Toronto, 19 December 2022
And now for a look at Real Estate. Still, the most often asked question is “How’s the market?” The market statistics from November and December of 2021 were the first indications that 2022 was going to parallel what happened back in 2017. Namely, we’d experience artificial and extremely high prices for the first few months and then a steady decline until the end of the year. And that was even before we knew about the tragic war in Ukraine and the government's attempt to bring inflation under control by raising interest rates 7 times this year from 0.25 percent to 4.25 percent, the most recent increase being .25% on December 7, 2022.
After reviewing the Toronto November Real Estate statistics, one can be lured into a false sense of stability. After all, the prices have been almost the same over the previous 5 months. Prices on average have been hovering around $1,080,000 since August.
I have said previously that averages can be deceiving and, once again, one should be cautious of the average trend because prices in the condo market have been holding their own much more than the higher-end detached homes. Also, your friend's neighborhood may not “perform” the same as yours, and location will continue to have the most influence on where prices could be next year.
Sales volume is down from a high of 10,955 sold back in March to the low of 4,444 sold last month in November.

Inventory is still indicative of a seller’s market with only 11 weeks of supply, but this is over 6 times as many weeks as was seen in the historic low of January this year which had barely 12 days of supply.

I can’t help but wonder if the strategy of reducing inflation by increasing interest rates is misguided since many of the world’s renowned economists believe that at least half of the inflationary challenge has been caused by supply chain issues. it seems to me that central banks, monetary policymakers, and lobbyists are employing this strategy for other political gains and goals. In Ontario and more particularly in the GTA, we hear such misleading statements as “Making homes more affordable,” Slowing down the overheated market,” and “Avoiding the real-estate bubble”.
Regardless of what we hear, it comes down to supply and demand. The truth is we are going to have a growing demand that will outpace supply for at least the next 10 years. Even if the various levels of government could wave a magic wand and support all their promises by creating more housing supply, we simply won’t catch up. Unless we halt immigration overnight. And that would be more ill-advised than any policy we have in place now.
For the next few quarters, qualifying for a mortgage will be challenging, but for those of us who remember, Mortgage Intertest rates reached a high of 21.75% in August 1981. Finding a roof over our heads oftentimes brings about creativity. Finding a solution may have to involve some out-of-the-box thinking; in the case of real estate, it may have to be out-of-an-area thinking.

If you would like to have a brief conversation regarding your next real estate move
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