Toronto Real Estate Market Watch Report March 2022
Monday Apr 18th, 2022
How did the Toronto real estate market react to the interest rate increase? Is it a buyers market now? Priscilla Han, Real Estate Broker in the Greater Toronto Area, will take a look at the newly available market watch report from the Toronto Real Estate Board for March 2022.
The average sold prices dropped approximately 2.5% during March 2022, from $1.3 Million as compared to February 2022, at $1.33 Million.
Compared with last year, March 2021, when there were close to 16,000 deals. 2022 March we had just under 11,000 deals - a 30% decrease in transaction volume.
Not every city is exactly the same.
When we look at Markham, we can see that in February the average sold price was $1.56 million, compared to $1.43 million in March. That's a more drastic decline of 8% compared to the overall GTA of 2.6% decrease. In terms of supply and demand dynamics, we can see that Markham has a 1.1 month of inventory and this number remains the same from February to March. I would again emphasize that Markham is a balanced market, but compared to the whole GTA area, buyers have relatively more options.
Does that mean the Toronto property market has become cold and remains inactive?
We're going to look at some other sets of figures before we draw any conclusions. Starting from December 2021, we saw property prices continue to rise due to the scarcity of supply. We have seen a slight drop of 12% in new listings compared to last year, and almost the same number of active listings compared to 2021. Since the end of last year and towards the first half of February, bidding wars have been common as sellers often receive up to 10, 20 or even 30 offers on offer review day.
This situation has improved quite significantly starting from the second half of February. While there are still multiple offers, often there are only less than 10 bidders. Although the competition amongst buyers is much less fierce than the end of 2021, we cannot draw a conclusion that we are in Buyer's Market yet.
Compared with February, when there was 0.8 month of inventory, March 2022 did improve slightly, but still with just 0.9 month of inventory, which shows the current selling speed - how fast the inventory is depleted. When the number is below one, it is typically considered a seller's market; and when the number is above 1, then it can be considered a buyer's market. Between 0.9 to 1.1 is considered a balanced market.
We are gradually turning from a seller's market into a balance market.
Next, we look at the average sold price across the whole GTA for the past 3 years. Starting from 2019, before COVID hits, and up to now, the average sold price has only dipped below the 2019 baseline once, during April 2020, when the lockdown started. Each year since 2019, the increase in the average sold price has been significant, thanks to historically low interest rate.
Another graph shows the number of transactions in the past 4 years. At first glance, March 2022 had decreased volume by 30% than March 2021. However, when we consider that March 2021 had the historical highest number of deals closed in a single month, even with a 30% drop, March 2022 was still the second-highest March in history.
How will the Toronto real estate market look in 2022?
Considering the strength of the market activity, I think the market will be determined by the higher interest rate, and the stricter non-resident speculation tax rules. These two forces are going to slow down some purchases from speculators or investors.
On the other hand, with the predicted number of 420,000 new immigrants coming into Canada, the highest number in the past hundred years, there will be more demand for accommodation to keep the market active.
Let's wait and see.
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