Buyers remaining on sidelines in Toronto housing market

Still, real estate board president sounds optimistic note on future

Buyers remaining on sidelines in Toronto housing market

October sales in Toronto’s housing market were down over the same time last year as affordability concerns and economic uncertainty continue to weigh on buyers – although prices ticked higher year over year, the city’s real estate board has revealed.

The Greater Toronto Area (GTA) saw 4,646 home sales last month, a decline of 5.8% compared with October 2022, the Toronto Regional Real Estate Board (TRREB) said on Thursday.

The average selling price, though, jumped by 3.5% on a yearly basis while the MLS Home Price Index Composite benchmark ticked upwards by 1.4%. TRREB also reported a spike in new listings over October last year, although the current level remains subdued compared with the 10-year average for the month.

What’s keeping Toronto’s housing market steady?

TRREB president Paul Baron sounded an optimistic note on the future of the market, noting that a combination of factors had kept homebuying interest steady – and predicting a further rebound when mortgage rates begin to fall.

“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong,” he said in remarks accompanying Thursday’s release.

“However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be homebuyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly.”

TRREB’s chief market analyst Jason Mercer said lower home prices have helped to slightly counteract the effect of higher borrowing costs brought about by the Bank of Canada’s spate of interest rate hikes.

“Competition between buyers remained strong enough to keep the average selling price above last year’s level in October and above the cyclical lows experienced in the first quarter of the year,” he said. “The Bank of Canada also noted this resilience in its October statement.

“However, home prices remain well below their record peak reached at the beginning of 2022, so lower home prices have mitigated the impact of higher borrowing costs to a certain degree.”