In 2023, the Greater Toronto Area (GTA) experienced a remarkable shift in market dynamics. While overall demand for housing was driven by record-level immigration, a large number of home-seekers turned towards the rental market, contributing to a dip in home sales.
The GTA housing market reported less than 70,000 home sales in 2023, a significant drop attributed largely to high mortgage rates and ongoing affordability struggles. High borrowing costs, in tandem with stringent federal mortgage qualification standards, created a significant barrier to entry.
Jennifer Pearce, President of Toronto Regional Real Estate Board (TRREB), addressed these challenges. She noted, "High borrowing costs coupled with unrealistic federal mortgage qualification standards resulted in an unaffordable home ownership market for many households in 2023."
But, she also offered a ray of hope for the year ahead, "Borrowing costs are expected to trend lower in 2024. Lower mortgage rates coupled with a relatively resilient economy should see a rebound in home sales this year."
TRREB's MLS® System registered just 65,982 home sales in 2023, marking a 12.1 per cent decrease compared to the previous year. This year over year decline was observed despite an increase in activity during the spring and summer seasons.
New listings also experienced a dip in 2023, continuing a trend that has been largely flat or declining over the past decade. This stagnation is of concern considering the steady population growth in the GTA. Seasonally adjusted monthly sales indicated an increase compared to November, whereas new listings marked a decline for the third consecutive month.
The average selling price for all types of homes in 2023 stood at $1,126,604, a 5.4 per cent decline from 2022. On a seasonally adjusted monthly basis, the average selling price inched higher, while the MLS® Home Price Index Composite experienced a slight drop.
"Buyers who were active in the market benefitted from more choice throughout 2023. This allowed many of these buyers to negotiate lower selling prices, alleviating some of the impact of higher borrowing costs," observed TRREB's Chief Market Analyst, Jason Mercer. He added, "Assuming borrowing costs trend lower this year, look for tighter market conditions to prompt renewed price growth in the months ahead."
TRREB CEO John DiMichele highlighted the need for an increased housing supply in response to the projected record immigration into the GTA. "People need to have comfort in knowing that they can plan their lives and future with the certainty that they will have the stability of an affordable place to live," he said.
As we step into 2024, the evolving dynamics of the GTA housing market bear watching. With anticipated changes in borrowing costs and the ever-resilient economy, we may well see a rebound in affordability and a growth spurt in the housing market.