December 5, 2023 | Buying
The Greater Toronto Area (GTA) housing market experienced a decline in sales in November 2023 due to high borrowing costs and uncertain economic conditions. However, the number of listings increased from last year’s supply. The market saw flat selling prices year-over-year, as inflation and elevated borrowing costs impacted affordability.
The housing market is sensitive to interest rates, and relief may be on the horizon. Bond yields, which underpin fixed-rate mortgages, have been trending lower, and many forecasters anticipate Bank of Canada rate cuts in the first half of 2024. This could alleviate affordability issues for existing homeowners and those looking to enter the market.
In November 2023, GTA REALTORS® reported 4,236 sales through TRREB’s MLS® System, a 6% decline compared to November 2022. However, the number of new listings increased by 16.5% over the same period. On a seasonally adjusted monthly basis, sales edged up compared to October 2023, while new listings were down by 5.5%.
The MLS® Home Price Index Composite benchmark and the average selling price, at $1,082,179, in November 2023 were flat in comparison to November 2022. The MLS® HPI Composite benchmark was down by 1.7% on a seasonally adjusted monthly basis. The average selling price was down 2.2% month-over-month.
Higher borrowing costs have led to a decline in home prices, providing some relief for buyers from an affordability perspective. As mortgage rates trend lower next year and the population continues to grow at a record pace, demand is expected to increase relative to supply. This will eventually lead to renewed growth in home prices.
To address housing affordability, recent policy decisions have been made, including allowing existing insured mortgage holders to switch lenders without the stress test. Additionally, the Office of the Superintendent of Financial Institutions (OSFI) is being called upon to apply the same approach to uninsured mortgages. Further policy work is required to bring more supply online to meet the growing demand for homes, both rental and ownership.