Toronto Real Estate Market Watch Report April 2022
Wednesday May 18th, 2022
Priscilla Han, your real estate broker in the Greater Toronto Area, takes a look closely at the newly available Toronto Real Estate Board market watch report released in April 2022. With the new series of policies launched by the Canadian Central Bank to hammer the real estate markets and multiple interest rate hikes, will the Toronto real estate market crash?
When we compare the April 2022 report to the March 2022 one, we study the 5 parameters, and compare them between year-to-year and month-to-month.
Average Sold Price
The average selling price has dropped from 1.3 million to $1.25 million compared to last month. This is a 3.6% decrease. The decline of average price trend continued from February, March to April.
Next, we take a closer look at the transaction volume, which has further dropped to 8,000. This means there were only 40% less transactions compared to the same period last year, and also much lower than 16,000 sales in March. But we shouldn't conclude that the market is "inactive", because when we examine the transactions for the past couple years, especially Spring 2021 Toronto real estate market has reached historical high transaction volume particularly in March and April. In March 2022, when we realized almost 16,000 sales in just one month, was the highest transaction volume for a few decades.
Last month while the Toronto real estate market "only" had almost 11,000 transactions, that is still an extremely active number. Even though this month, volume came down to 8000, which seems low compared to last year in April 2021 or last month in March 2022, but if we look at a pre-COVID 19 pandemic year, like 2019, we are not too far away. 8000 is actually still a very normal amount for any normal year.
Although our observation of the Toronto real estate market in terms of the activity hasn’t acted too strangely, we should pay more attention on the supplier side.
For active listings there were 13,000 listings, which is a much higher amount than last month at 10,000 listings. Even with the increase in listings, we notice that the sellers aren’t panicking. When we compare the number of new listings in the same period last year, and even last month in March 2022 there were 20,000 new listings.
The sellers are not panicking, at least not just yet. Actually, I would think many of them are holding their property back. Maybe the sellers are hoping to rejoin the market when in the future the price is better.
Sales to New Listings Ratio
I want to introduce this one last index to reflect the dynamic between supply and demand. This is called sales to new listing's ratio (SNLR). This ratio is calculated by dividing the number of sales by the newly available listed properties. When this ratio is between 0-60%, the market is deemed as balanced. But if it’s above 60%, it’s either because there are too many sales or because there aren’t enough listings. In contrast, if the SNLR is below 40%, it’s because either the sales are not very active or there are not so many properties being sold. Buyers would have lots of properties to choose from. In a case like that, it will be considered a buyers' market.
Since September 2019, the market has been entering into a strong seller market, and has remained in the seller market for over a year. The situation only turned around in January 2022, and the SNLR has started to drop. It entered into a balanced market a couple of months ago and managed to decline in these couple of months. In April, eventually it dropped to the edge of the balance market. If the trend continues, we will see the market become a buyers market.
All these means the competition among buyer are no longer fierce as they've got enough to chose from.
Days on Market Trending Longer
One more piece of data is the Days On Market (DOM). Once again, April 2022 shows the average DOM being 11 days, which is still very short. However, looking at the data, the average days on the Market of 11 days is longer than the same period last year (10 days) and longer than last month (8 days).
Examining Real Estate Market in Different Areas in the GTA
I also want to talk a bit about different areas in the Greater Toronto Area. As we can see, in the 905 area, mainly in the suburbs of the City of Toronto, detached and Semi-Detach Freehold Town Homes (FTH), average selling price each dropped over $100K.
But the City of Toronto in terms of resistance to decline is a lot harder. In fact, even for a detached home, average home price increased from $1.92M to $1.95.
One property type I want to draw your attention to, is the condo market in the City of Toronto. During the past year the condo apartments didn't really increase as much as the other property type, so when it comes to declination it also doesn't decline quite as much. Last month's condo apartment average sale price of $831K and this month dipped slightly to $820K.
Summary for Toronto Housing Market in April 2022
To summarize, the market no longer favours sellers - buyers nowadays have the turn to take more time to choose from a lot of properties and choose the one they really like. In the future, how the market is going to turn will heavily depend on whether multiple interest rate raises will scare away the short-term speculators or the investors who are heavily dependent on mortgage rates, or whether the estimated 420,000 new immigrants entering Canada this year will increase the housing demand in the Canadian Housing Market.
Let's watch what forces are going to win.
Buying and Selling Toronto Real Estate
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