September 11, 2023 | Buying
In August 2023, there was a decrease in home sales compared to the same period in 2022 due to higher borrowing costs, uncertainty about the economy and Bank of Canada’s decision-making, and a limited supply of listings. However, the average selling price remained relatively stable. On a monthly basis, both sales and average price slightly decreased after being seasonally adjusted.
Despite the current volatility, demand for both ownership and rental housing in the Greater Toronto Area and the broader Greater Golden Horseshoe is expected to remain strong, thanks to record immigration levels. Nevertheless, more stability is needed for buyers and sellers to determine the direction of borrowing costs and the overall economy.
The Greater Toronto Area REALTORS® reported a 5.2% decrease in sales in August 2023 compared to the same month in 2022. However, new listings increased by 16.2% year-over-year, providing some relief for the supply shortage. Although seasonally adjusted sales slightly decreased by 1% compared to July 2023, new listings slightly increased by 1.3%.
A more balanced market during the summer led to selling prices being similar to last year’s levels, with a slight decrease compared to July. As interest rates continued to rise after a pause in the winter and early spring, many buyers had to adjust their offers to qualify for higher monthly payments. Consequently, fewer sales occurred as sellers didn’t accept lower-than-expected selling prices.
The MLS® Home Price Index Composite benchmark for August 2023 increased by 2.5% year-over-year. The average selling price also increased by less than 1% to $1,082,496 over the same period. After being seasonally adjusted on a monthly basis, the MLS® HPI Composite benchmark remained virtually unchanged, while the average price decreased by 1.6%.
Although higher interest rates impacted affordability, households’ balance sheets will also be affected by the prospect of higher taxes. Younger buyers with limited savings will be particularly affected. The City of Toronto’s decision to raise the municipal land transfer tax (MLTT) rate on properties over $3 million as a revenue tool should also consider helping first-time home buyers struggling to enter the market by adjusting their tax rebate threshold to reflect today’s higher home prices.
There is no doubt that transacting in Real Estate has certainly transformed these last few years. We have had the pleasure of servicing our clients through these unprecedented times and will continue to do so as the real estate market climate changes. Despite the recent cooling of sales, the Toronto Real Estate Market still remains one of the strongest markets in the world, and we can offer our guidance and expertise to help you make the next real estate move that is right for you and find ways to take advantage of the current market. Contact us today for a no-obligation discussion on how we can help you throughout your real estate journey.