June 7, 2022 | Market Update
In May 2022, the Toronto real estate market saw more buyers responding to the increased cost of borrowing. The expectation of the Central Bank’s rate increase of 50 basis points – and the actual rate hike itself on June 1st – are causing some buyers to pause their home search in the short term as they wait for a bottom in prices. Continuing from the trend in April 2022, the number of home sales were down in May 2022 on a year-over-year basis, while the number of new listings were up compared to May of 2021.
TRREB’s MLS System reported 7,283 sales in May of 2022 – down 38.8% compared to May 2021 and down 9% compared to April 2022. However, the number of new listings reported rose to 18,679 in May 2022 compared to 18,593 in May 2021. This represents a minor increase of 0.5%. The lower number of sales on a year-over-year basis means that the number of active listings were up by 26%.
Average selling prices trended upward from $1,108,124 in May of 2021 to $1,212,806 in May of 2022, representing a 9.4% increase, and the MLS Home Price Index Composite Benchmark was up by 23.9%. While the average home price has continued to increase, market conditions have become much more balanced meaning that on a month-to-month basis, sale prices have trended downward.
Observed price trends over the past few months have been in line with TRREB’s 2022 market forecasts. Following a very tight market in the first quarter of the year, the current rate tightening cycle by the Bank of Canada has led to a drop in demand, meaning buyers now have more purchasing power.
TRREB forecasts that while the market will continue balancing throughout the summer, once home buyers have a chance to adjust to the new cost of buying, housing demand will remain competitive, supported by a mixture of factors such as low unemployment rates, increasing wages, high job vacancies, and record immigration rates.