INTEREST RATE HIKES DRIVE DOWN HOME SALES AND NEW LISTINGS IN NOVEMBER
Tuesday Dec 06th, 2022
Homeownership market activity in November continued to be influenced by the impact of higher borrowing costs on affordability. Sales were down markedly compared to the same period last year, following the trend that unfolded since the commencement of interest rate hikes in the spring. New listings were also down substantially from last year, and at a very low level historically. The fact that the supply of homes for sale has remained low, has supported average selling prices at the $1.08 to $1.09 million mark since August. Greater Toronto Area Realtors reported 4,544 sales through TRREB’s MLS System in November 2022 – down 49 per cent compared to November 2021, but remaining at a similar level to October especially after considering the recurring seasonal downward trend in the fall. Keep in mind November 2021 was a record breaking year for sales. New listings, at 8,880, were down on both a year-over-year basis and month-over-month basis.
Over the medium-to long-term, the demand for ownership housing is expected to pick up strongly. This is because a huge share of record immigration will be pointed at the GTA and the Greater Golden Horseshoe in the coming years, and all of these people will require a place to live, with the majority looking to buy. The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth. We have seen a lot of progress this year on the housing supply and related governance files such as the More Homes Built Faster Act. This is obviously good news. However, we need these new policies to turn into results quickly which is unlikely as these policies usually take some time to come into effect in the marketplace.
The average selling price for all home types combined was down by 7.2 per cent year over-year. Annual price declines continued to be greater for more expensive market segments, including detached and semi-detached houses. Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the downward price trend experienced in the spring seems to have come to an end. Selling prices have flatlined alongside average monthly mortgage payments since August.
The market is currently a more balanced market which is still adjusting to higher borrowing costs. A large part of sales being down is also related to a lack of inventory on the market as home sellers seem to be holding tight until the spring hoping for better selling results in the spring. I think we will see a larger amount of homes come on the market in the coming months and in Spring 2023 which will kick up sales. Where the market goes going forward is totally dependent on what happens with mortgage rates and inventory levels in the coming months and next year. The introduction of the vacant home tax being applied in 2023 may also bring more homes on to the market as owners of these properties may list these properties for sale. I expect the spring of 2023 will be a market where we see much more inventory then your typical spring market and this should translate into more sales.
If you have any questions on the market or are planning a move and would like to discuss your real estate goals feel welcome to call or email me at 416-901-8777 or email@example.com.
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