In response to the attempt of controlling the runaway inflation, The Bank of Canada has raised interest rates 1.5% between June 1st and July 13th of 2022. With rising interest rate and plunging property prices, has the Toronto Real Estate market hit the bottom yet? How much benefit are buyers getting if they wait a little bit longer? For young people who recently bought their first condo, or those who are getting ready to get into the real estate market, this is a time that may be quite concerning. This month’s June Toronto Real Estate Board Market Watch Report will give you a better sense of the real estate market in the GTA.
AVERAGE SOLD PRICE
The Average Sold Price is $1.146 million in June 2022, a 5.4% decrease from May 2022 of $1.212 million. The peak was in February 2022 at $1.334 million. Since February’s peak, June has seen 14% decrease and the monthly average decrease is about 3.5%, so this drop is significant.
NUMBER OF SOLD PROPERTIES
There has been significant decrease in the number of sales made in June 2022. GTA real estate board recorded less than 6500 properties sold, 40 % decreased from June 2021. Additionally, May 2022’s number of sales of 7300 properties is another 10% decrease from May 2021. Sellers may be holding back as the prices continues to drop, but at the same time buyers are also holding out hoping to get better deals later.
Interestingly, although the market is no longer active, sellers are NOT anxious and they are not actively trying to get rid of their properties as quickly as possible.
NEW LISTINGS AND ACTIVE LISTINGS
June 2022 has around 16,000 new listings which is almost identical with June 2021. And if we look at May 2022, the 18,000 new listings is comparable to May 2021. This indicates that sellers are not trying to sell their property to prevent further losses.
However, if we look at the number of active listings, the numbers have not changed much, meaning that there has been decreasing market activities.
INVENTORY
While we have a higher inventory, you can see in May the inventory is 2.1 months. In June 2022, the inventory has increased to 2.5 months, meaning that at the current speed, it will take the market 2.5 months to deplete the overall active listings. This shows that buyers currently have more choices than before, an indication that currently the Toronto Real Estate market is in the buyer’s market.
AVERAGE DAYS ON MARKET (DOM)
Currently the average days on market (DOM) is at 15 days, 2 days longer compared to June 2021, and 3 days longer than May 2022. Although it's not a very high number, this trend shows that the average days on market is getting longer and longer.
After seeing the stats you're probably wondering if the Toronto Real Estate Market has already hit the bottom? Is it the right time to buy now?
If you ask 1000 people this same question, you will have 1000 different answers.
What I can tell you is that if you’re a buyer, I encourage you to collect as much data as possible. Real estate market is a market about supply and demand. The interest rate has undoubtedly created an impact, but the inflow of new immigrants coming to the Canada each year will continue to sustain the demand.
IS THIS A GOOD TIME TO GET A GOOD DEAL IN TORONTO REAL ESTATE?
Let’s compare between a Vaughan detached property, and a Toronto condo. These are from two different cities, and two different property types.
The red line shows the average price for the Vaughan detached house, the blue line shows the average price for the Toronto condo, while the green bars represent the prime interest rate.
Vaughan’s detached house in the beginning of this year was listed for $2.13 million. Since March 2022’s interest rate raise, the average price started to decline. By June 2022, the average price has dropped to $1.75 million.
Toronto condo, on the other hand, is on a different trend. As I explained in my previous video, during COVID, the whole Toronto condo market price did not rise much as compared to detached homes in surrounding areas. This was because nobody was going into downtown Toronto to study or work, so the Toronto condo market has recorded the lowest increase as compared to other property types. Since the Toronto condo market did not increase much, it also did not decline as much during the interest rate climb. In summary, the Toronto condo price pretty much remained flat for the first half of 2022.
How to QUICKLY calculate your monthly mortgage?
The Prime rate has risen quite a few times in 2022, from January 22nd’s 2.45% to June 22nd’s 3.7%. You can visit my website https://priscillahanrealty.com and use the drop-down menu to find the Mortgage Calculator. Here you can enter the property’s price, percentage of down payment and then choose amortization period and mortgage rate to quickly calculate your monthly mortgage.
From our comparison example, if you purchased an average priced Vaughan detached house in January 2022, using the prime rate of 2.45%, your monthly mortgage would be $7600. However, since the price drop is so significant, if you waited until June 2022 to purchase an average price detached home in Vaughan, you'll only need to pay $7126 even though the prime rate is at 3.7%. You would have saved almost $500 each month in this calculation.
On the other hand, because the property price for Toronto condos remains pretty much flat, with a lower interest rate in January 2022 you only need to pay $2700 on monthly mortgage. However, if you waited until June 2022 when prime rate went up to 3.7%, your monthly mortgage payment also go up quite significantly to $3145, which is $400 more than if you were to purchase in January 2022.
Potential buyers in the Toronto Real Estate market may think that rising interest rates are helping them by reducing the home prices. However, as buyers, you must also understand that interest rates have a direct and critical role in determining the costs of your monthly mortgage, which is the true cost of purchasing your home.
When making your buying and selling decisions, be sure to include all the financial aspects as much as possible.
Buying and Selling Toronto Real Estate
Whether you are buying your first condo, or selling a single-family home, Team Priscilla Han Realty can help you.
We are proud to serve the whole Greater Toronto Area (GTA), including but not limited to the CIty of Toronto, North York, Markham, Richmond Hill, Vaughan, Aurora, Scarborough, Mississauga, Oakville , Pickering, and Oshawa.
We help research properties that are best tailored for home buyers, providing them with instant notification of newly available properties, access to exclusive deals that are not on the MLS.
For property sellers, we have a database of thousands of buyers-in-wait, 20,000+ combined subscribers on YouTube TouTiao. Our "Your Home Sold Guaranteed, or I'll Buy It" program provides seller with a worry-free selling process. Our professional staging, photography, and videography service help sellers present their property at their best and maximize exposure to potential buyers!
Reach out to us at prishanrealty@gmail.com, or call/text: 647-360-8963 for a free consultation or home evaluation. Visit our website, https://priscillahanrealty.com for more up to date videos, blogs, and listings.
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