Estimates of the extent of the drop are getting worse, with new estimates clocking in around 7.8%, compared to the 2.2% drop predicted only a few months prior. This is the largest price decline since the Canadian Real Estate Association started collecting data in 2005.<\/p>\n
Conversely, prices in large markets such as Toronto and Vancouver are expected to drop between 8.5% and 7.3% in 2023 after experiencing a steady rise of 13% and 10.6% respectively in 2022 so far.<\/p>\n
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Average Prices for Toronto Homes Still Largely Unaffordable<\/b><\/h2>\n
Despite recent drops in housing prices, homes in Toronto are still outside the affordable range for median household incomes. The affordability crisis is at the forefront of the public eye, even as rising home prices recover a bit from their lows in the previous months.<\/p>\n
Even with the downturn, most Toronto housing remains well outside the affordable range for median income households. NBC reports<\/a> that the affordability of housing in Toronto has reached the worst it has been in 40 years.<\/p>\n The affordability of Canadian housing is a major focus of the recent report, which is titled \u201cHousing Affordability: The Worst Deterioration in 41 Years in Q2 2022\u201d. The Q2 2022 decline in affordability is the sixth consecutive quarterly decline as of yet.<\/p>\n Compared to worldwide markets, the affordability of housing in Toronto has been steadily deteriorating. According to recent numbers from the NBC<\/a>, downtown home prices in Toronto have reached $860 USD per square foot; above historically expensive cities like Seattle.<\/p>\n The report notes that affordability in the Greater Toronto Area has experienced the largest deterioration since 1981. Mortgage payment averages between condos and non-condos have reached 90% of the median household income.<\/p>\n However, the average monthly rent seems to have plateaued, disconnecting from median mortgage costs and holding steady since back around 2017. The annual income required to afford a representative home in Toronto is sitting around $265,664 CAD.<\/p>\n The statistics above indicate several factors that drive the GTA housing markets. Not only is this populated region of Canada one of the largest for business, industry, and job creation; it is also witnessing a steady population growth.<\/p>\n Canadian property buyers have nearly equal confidence in Canadian housing \u2014 with 39% as confident as before the pandemic and 37% less confident. 54% say they are still considering buying or selling homes in 2022.<\/p>\n \u201cThe inter-provincial relocation trend that we began to see in the summer of 2020 still remains very strong and is expected to continue into 2022,\u201d says Christopher Alexander, Executive Vice President and Regional Director for REMAX.<\/p>\n The REMAX Housing Market Outlook Report<\/a> shows that some Canadians are still very confident in Canada\u2019s real estate market and housing market, with 49% of respondents saying real estate is still one of their best investment prospects in Canada.<\/p>\n Many buyers are trying to buy now to avoid increasing interest rates, which will likely make larger mortgages more affordable. However, if you wait on lower prices when you purchase you might not have a chance.<\/p>\n For sellers, properties can sell easily if a buyer is willing to step up. As property in the GTA is hard-to-buy and its trend of appreciation is long-standing, values are likely to continue rising in the next year.<\/p>\n Since interest rates are expected to continue rising, it\u2019s hard to say whether now is a good time to buy into Toronto\u2019s real estate market, even with prices increasing from previous lows. While the market traditionally favors buying in the summer, Torontonian investors are cautious.<\/p>\n There were many signs of the Toronto housing bubble in February 2021. In March 2021, many big banking economists questioned whether home prices had jumped dramatically in the past few years due to speculation. There were, however, no legislative changes.<\/p>\n Bank of Canada Governor Tiff Macklem has been quoted as saying \u201cwe need the growth we can get\u201d. This comment came in the wake of concerns being voiced about the significant increase in housing prices throughout the pandemic.<\/p>\n Unlike other countries with highly inflated housing prices, demand for real estate in Canada doesn\u2019t seem to be slowing down, which has driven recent price resurgences in places like Toronto and Vancouver where the housing supply is lower.<\/p>\n Due to these types of fluctuations, as well as the disconnect between demand and availability, the possibility of sudden changes in buyer\u2019s attitudes becomes very real. It will be up to the BoC and Canadian government to curb these sentiments through new policies.<\/p>\n The recent resurgence in real estate prices is good news for investors who bought at the bottom, although the downturn may not be over as real estate professionals and real estate agents predict continued national decreases in price through 2023.<\/p>\n However, with prices expected to start recovering sometime in 2024, buyers looking to get in on the bottom floor might be in luck. It will all depend on how the Bank of Canada continues to handle its response to the affordability crisis.<\/p>\n In general, Canadian investors will want to avoid Canadian real estate investment<\/a> trusts, since these holdings will be highly exposed to the continued national downturn. Buyers of actual real estate in Toronto and Vancouver might be able to see some returns, however.<\/p>\nData Dive: Comparing Toronto Real Estate Globally<\/b><\/h2>\n
Canadians Are Divided on the Housing Market<\/b><\/h2>\n
Will 2023 Be a Good Time To Buy a Condo in Toronto?<\/b><\/h2>\n
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Key Issue: Toronto\u2019s Suburban Housing Bubble<\/b><\/h2>\n
How Can Canadian Investors Profit From This?<\/b><\/h2>\n
What The Bank of Canada Has to Say About Real Estate<\/b><\/h2>\n