To our dear clients, friends, and family,

With our busiest months behind us, we wanted to update you on what’s happening in the market right now. We are at a very interesting intersection of GTA Real Estate… with mounting inventory pushing us into a buyer’s market, it’s important to remember we’re still dealing with a significant, long-term housing shortage. That is quite a unique situation, and it could mean timing your next move could save you a hundred thousand dollars or more.

The Numbers

October Numbers:

Average Sale Price (all home types): $1,125,928 (up 3.5% from Oct 2022)

Sales: 4,646 (down 5.8% from Oct 2022)

New Listings: 14,397 (up 38% from Oct 2022)

Active Listings: 19,540 (up 50% from Oct 2022)

While the average home price is up 3.5%, the leader in appreciation is detached homes. Year-over-year, detached homes appreciated 6.1% from October 2022, while semi-detached and townhomes appreciated 2%. Condos experienced a price decrease of 1.2%.

The uptick in new listings, active listings, and the drop in sales is a notable shift from the first 8 months of the year though.

The above graph is for all regions and home types listed on the Toronto Real Estate Board. The numbers we want to highlight is Months Of Inventory (MOI). This is the measure of how many months it would take to sell all the homes currently listed for sale at the current pace of sales. An MOI below 3 is a seller’s market (which we saw from February till August). However, September and October shifted us squarely into buyer’s market territory.

There are many neighborhoods that are doing better than the average, and many that are doing worse. Some home types and regions are doing predictably bad (like cottage country), because of high interest rates. But, some previously resilient neighborhoods are also seeing mounting inventory. Simco County and Muskoka are sitting at 7 months of inventory, but, surprisingly, Oakville isn’t fairing much better: they are at 6 months of inventory. Detached homes in Toronto are fairing very well, at 2.5 months of inventory, while Toronto condos are sitting at 3.6 months of inventory.

We expected Toronto condos to have higher levels of inventory, but it seems investors are willing to hold onto these properties, even when interest rates are high. A quick example of some of the challenges investors are facing in Toronto right how can show you why this is so interesting to us… a condo purchased in 2020 for $550,000, and rented out at $2250 a month, would carry itself at 2.5% interest; but at 6.5% interest, that condo would cost the landlords $3,275 every month ($1000 more than the rental income).

We think a big reason why investors are still holding onto their properties is because of the long-term outlook for real estate in Ontario.

Canadian Housing And Mortgage Corporations: Housing Shortages In Canada.

The Canadian Housing and Mortgage Corporation (CMHC) recently updated its “Housing Shortages In Canada” report. If you don’t know, CMHC is the crown corporation that advises on federal real estate matters. The report highlights a stark reality: Ontario will be 1.48M homes short by 2030. The most alarming part of the report is the projected price appreciation. They expect prices to grow 86% from 2019 to 2030. In 2019, the average home price was $819,153; today it’s $1,125,928. By 2030, it’s projected to reach $1,523,624. You can read the report here. 

The report also highlighted an unlikely scenario, where inflation remains above the bank’s target for an extended period of time. This could lead to interest rates settling around 5.7%. In this scenario, we would see a 74% price growth from 2019 to 2030. In this scenario, prices would hit $1,425,326 by 2030.

To meet housing demand, we need to build 211,428 homes annually. Currently, we build less than 100,000 each year. There’s growing concern that as production ramps up, the cost of labour and materials will also increase, driving up the cost of new homes.

Is It Better To Buy Now? Or Wait?

While the monthly payments might be lower in 2025, the $500 savings is not offset by the additional $149,989 it might cost to buy the home. Best of all, if you buy today and take a mortgage of $888,000, instead of $1,107,191, when rates hit 4.49%, your monthly payments will be $4,494; a far cry from the $5,072 payments if you buy at the higher price.

In the coming months, there are many exciting changes happening to the real estate industry. The sweeping changes affect the way realtors deal with public, market properties, and host bidding wars. When the time comes, we’ll do our best to keep you updated on how it impacts you.

Hope you have a wonderful month ahead!

Best Regards,

Christo and Janette