There are mixed signals in the city
Toronto home prices edged up modestly in March, but sales activity trailed the previous year’s figures according to the Toronto Regional Real Estate Board (TRREB).
Data shows benchmark home prices rose 0.3% year-over-year while sales declined 4.5%. The real estate board noted that an additional statutory holiday (Good Friday) in March compared to April last year partially explained the sales slowdown.
The benchmark home price in Toronto reached $1.12 million in March, representing a 2.5% increase compared to February and a slight 0.3% increase from a year ago. However, sales figures tell a different story, with 6,560 homes changing hands – a 4.5% decline compared to March 2022. New listings, on the other hand, saw a 15% year-over-year increase.
TRREB maintained an optimistic outlook for the Toronto housing market.
“We have seen a gradual improvement in market conditions over the past quarter,” TRREB president Jennifer Pearce said in the report. “More buyers have adjusted to the higher interest rate environment. At the same time, homeowners may be anticipating an improvement in market conditions in the spring, which helps explain the marked increase in new listings so far this year.”
Pearce believes lower borrowing costs later in the year could spur higher sales and push prices upward.
TRREB’s chief market analyst, Jason Mercer, also anticipates upward price pressure in the coming months, especially if borrowing costs trend downwards as expected.
“Price growth is expected to accelerate during the spring and even more so in the second half of the year, as sales growth catches up with listings growth and sellers’ market conditions start to emerge in many neighbourhoods,” Mercer said. “Lower borrowing costs in the months ahead will help fuel increased demand for ownership housing.”
Economists, however, expressed a more cautious stance.
Desjardins economist Marc Desormeaux commented: “We wouldn’t necessarily interpret the March results from TRREB as indicative of a lot of strength in the market or the economy. You know, sales were down year over year. The average price was only up about 1% year over year, which is below the rate of inflation.”
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Darren King, investment adviser at National Bank of Canada, also expects economic sluggishness to continue, even with potential rate cuts.
“We will be keeping a close eye on developments in the housing market over the next few months, especially as we expect the Bank of Canada to cut its overnight rate in July with the national economy expected to remain sluggish,” King said.
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