GREATER TORONTO AREA, Ontario, (Friday, June 10, 2022) — The Greater Toronto Area (GTA) housing market conditions continued its downward trend, in response to higher borrowing costs.
Similar to April’s results, May sales were down, on a monthly and annual basis. Conversely, active listings, at the end of May, were up on a month-over-month and year-over-year basis.
More balanced market conditions have provided buyers with more negotiating power. As a result, while benchmark and average home prices were up substantially, compared to last year, selling prices trended lower, on a month-over-month basis.
“Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term. There is now a psychological aspect, where potential buyers are waiting for a bottom in price. This will likely continue through the summer.
“However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration,” said TRREB President Kevin Crigger.
Realtors in the GTA reported 7,283 sales through TRREB’s MLS® System last month — down 38.8 percent, compared to May 2021; and down nine percent compared to April 2022.
The number of new May listings was similar to last year’s level, and edged up, on a month-over-month basis. With sales down and new listings trending flat to slightly up, the number of active listings was up, on a year-over-year basis, by 26 percent.
Market conditions remained tight enough to support an overall average selling price of $1,212,806 for May 2022, representing an annual growth rate of 9.4 percent. The MLS® Home Price Index Composite Benchmark was also up, on a year-over-year basis, by 23.9 percent. On a month-over-month basis, both price metrics were lower, reflecting more balanced market conditions.
“Price trends, observed over the past three months – both in terms of moderating annual growth rates and the recent month-over-month dips – are in line with TRREB’s forecast for 2022.
“After a strong start to the year, the current rate tightening cycle has changed market dynamics, with many potential home buyers putting their purchase on hold. This has led to more balance in the market, providing buyers with more negotiating power,” revealed TRREB Chief Market Analyst, Jason Mercer.
Explained John DiMichele, TRREB CEO: “The recent elections have shown that senior levels of government understand the need for more housing to support regional growth. The approval of new and more diverse housing types happens at the municipal level, subject to provincial laws and regulations.
“It will be important to understand the stance of local policymakers, as we move toward the fall local elections. The shorter term impact of higher interest rates will not be with us forever. Supply remains the long-term challenge.”