Budding optimism in the 2024 housing market led to a modest increase in home sales across the Greater Toronto Area to close out 2023, reported Urbanation, Canada’s leading research and analytics firm for the condominium, rental, and commercial property markets.
The Bank of Canada deciding to hold its overnight lending rate at 5% may have compelled sellers in Canada’s largest metro region to delay listing their homes in anticipation of ameliorated conditions this year. With rumblings south of the border that the Federal Reserve is poised to drop its policy rate, which would moved the Canada’s central bank to respond in kind, sellers are confident that market conditions will improve in 2024.
At 65,982, total sales in 2023 marked a 23-year low, declining by 12% year-over-year from 74,047, and falling well below the record high of 121,712 achieved a couple of years earlier when the BoC’s quantitative easing regime plunged its policy rate to 25 basis points.
Still, there were signs of improvement as the curtains drew on 2023. In December, sales rose by 11% on an annual basis to 3,444, despite still being 27% below the 10-year average. However, that could preponderantly be explained by new listings decreasing year-over-year in December to 3,886 units—17% below the 10-year average, and the second lowest level for the month in 2022 years—leading to speculation that sellers are taking a wait-and-see approach to the market.
Active listings in the GTA declined by 19% year-over-year in 2023, and despite being 20% over the decade-long average, at about three months of supply (down from four months in November), they were 11% lower than the 20-year average.
The price of a GTA home increased by 3.2% in December to an average of $1.084 million, marking the seventh straight month of year-on-year growth. Despite finishing the year on a high note, home prices declined by 5.4% last year from 2022. Moreover, that was the first time GTA home prices declined since 2018, when they fell by 4.2% following the Kathleen Wynne government’s Fair Housing Plan, which included, among other things, a 15% tax on foreign buyers.
Still, home price appreciation in the GTA has averaged a robust 8.3% over the last 10 years, and 7.1% over the last two decades.
In December, appreciation was strongest for homes $700,000 and higher, even increasing by 17% for homes in the $1.5-1.749 million range. But for 2023 in its entirety, prices declined for everything above $600,000—which was particularly acute for homes priced at least $1.25 million, decreasing by 20%. That was a marked contrast to the year-over-year spike in sales (+33%) for homes below $600,000, no doubt a result of higher mortgage rates.
Despite decreasing by 10% year-over-year in 2023, condo sales have been among the best performing asset class over the past three years. That isn’t too surprising considering sales surged by 51% in 2021. Condo inventory in the GTA declined from 5.4 months in November to 4.8 months in December.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
