Introduction:

A Turnaround in the Toronto Housing Market

The Toronto housing market has shown signs of resurgence, with Toronto’s benchmark home prices experiencing their first increase in nearly a year. The city’s home prices rose 1.1% to $1.09 million (US$803,000) in February, marking the first month-over-month growth since the Bank of Canada began raising borrowing costs in March 2022. This development comes as welcome news to potential home buyers in Toronto, despite the market still being down 19% from last year’s peak.

A Shift in Home Buying Habits Amidst Rising Borrowing Costs

The Bank of Canada’s decision to raise borrowing costs aimed to curb escalating home prices and regulate home sales. Toronto Regional Real Estate Board (TRREB) President Paul Baron believes this strategy has been effective, stating, “Home prices have dropped over the last year from the record peak in February 2022, mitigating the impact of higher borrowing costs.”

As a result, many homebuyers have opted for lower-priced homes to counterbalance the increased borrowing costs. This shift in purchasing behaviour has led to a significant increase in the share of home purchases below one million dollars compared to the previous year.

Sales Numbers Reveal a Market Slowdown

In February, the number of home sales increased by 8.5% from the previous month, totalling 5,224 transactions on a seasonally adjusted basis. This figure is the highest since August 2022, but it also indicates a market slowdown, as it represents only half the transactions processed in February 2022.

The Impact of Decreased Listings on Supply and Demand

TRREB data reveals a 41% decrease in new listings compared to the same month last year, which could signify a decline in both supply and demand, potentially stabilizing the market. However, if supply decreases without a corresponding change in demand, homebuyers in Toronto may face challenges with availability and pricing.

Jason Mercer, TRREB’s chief market analyst, shared his thoughts on the situation in a statement: “Increased demand will run up against a constrained supply of listings and lead to increased competition between buyers. This will eventually lead to renewed price growth in many segments of the market.”

Conclusion:

A Glimpse of Hope for Toronto’s Housing Market

Toronto’s housing market is starting to improve, but there are still some challenges it needs to overcome. Imagine if there were fewer homes for sale, but more people wanted to buy them; this could cause prices to go up again. So, even though things are looking better, we should still be careful and watch how the housing market changes. But for now, lower prices and people choosing less expensive homes give us hope that the housing market will keep getting better.