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Here is Toronto's latest real estate market update for the summer ☀️🏡

The real estate market numbers reviewed in the video were released by the Toronto Real Estate Board and can be viewed here (click to view). 

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Below are the clickable TIMESTAMP links for the video

00:00 - Intro

00:26 - volume of sales

00:37 - number of new listings on an annual comparison

1:01 - average price increase for all property types combined in the GTA

1:08 - average property price in the GTA

1:21 - housing sector that saw the highest price increases

1:38 - housing sector that saw the lowest price increase

2:02 - average price for a fully detached home

2:11 - average price for a semi-detached home

2:19 - average price for a townhouse

2:27 - average price for a condo

2:36 - supply and demand

2:58 - how much longer properties are taking to sell on an annual comparison

3:07 - Canada's record high inflation & increasing mortgage interest rates

3:44 - tips for individuals who are thinking of selling a property this year

4:00 - average rental price increases on an annual comparison

5:04 - tips for individuals who are planning to purchase a property this year

5:10 - why it's a great opportunity now for purchasing real estate

6:22 - advice for purchasers who are trying to time the lowest end of the market

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Full Video Transcript

Hello everyone. It's Karen from Toronto here.

The real estate market in the GTA is certainly shifting this summer due to a number of government initiatives, which include our mortgage interest rates rising.

Now, I'd like to point out that we have timestamps in the description box below if you wish to skip forward to a particular topic. So to help us understand how the market is behaving, let's take a look at the numbers together.

As a result of the mortgage interest rates increasing, the number of property sales have dropped by a significant -41.4% compared to last summer. The number of new listings on the market in June 2022 compared to last year June 2021, were essentially the same at just over 16,000 listings in the GTA. This indicates that the volume of sales, having dropped by -41.4% is largely the result of mortgage interest rate increases and not the result of low inventory on the market.

The average property price has increased by a more balanced +5.3% over the past year, bringing the average property price to $1,146,254.

We're seeing housing price growth being driven by the more affordable market segments.

In that regard, the housing sector that saw the highest price increases, on average, were condominiums in the 905 suburbs. And they saw a strong +13.2% increase in prices between June 2021 to June 2022.

Conversely, the housing sector that saw the lowest price increases, on average, were fully detached homes both in the city of Toronto and in the 905 suburbs. 

And detached homes in the GTA saw a very conservative +2.4% increase in prices over the past year.

Now to put things into perspective, let's look at the average price of a home.

For a fully detached home in Toronto, the average price is $1,737,012.

A semi-detached home comes in at an average of $1,343,378. 

While a townhouse in Toronto costs an average price of $1,027,050. 

Now for the condo market, the average Toronto condo is $771,267.

In terms of the supply and demand, the GTA has +42.5% more properties for sale this summer than we did last summer. 

Now since we have almost double the amount of inventory on the market, combining that with -41.4% fewer sales, we're clearly seeing properties sitting much longer on the market before they sell. On average, properties are taking +41.2% longer to sell than they did last summer. 

Here are some final thoughts. With Canada experiencing record high inflation rates at around 7.7%, which is the highest it's been in the past 40 years, our government has already made plans to continue increasing mortgage interest rates in order to help reduce the inflation.

The most recent mortgage rate increase last week on July 13th by 100 basis points is the largest rate increase we've seen since 1998. Now, with mortgage interest rates continuing to rise, it's no surprise that most industry experts are anticipating real estate prices to soften a bit further. 

Here are a couple of tips for those who are thinking of selling a property this year. Since real estate prices have softened over the past few months and prices are likely to drop further, consider keeping your property as an investment property and renting it out rather than selling it. With the majority of rental properties seeing significant rental price increases of around +17.0% compared to last summer, this is a unique opportunity for owners to allow the rent to cover the cost of ownership for at least another year until our inflation is under control. And with our strong rental market in the GTA this summer, with multiple offers being common for rentals, property owners can be more selective in securing the ideal tenant after running all of the background checks. 

Now, if you've decided to sell a property this year where keeping it as an investment property is not an option, then it's in your best interest to market the property sooner than later. We've already seen the market shifting dramatically since the beginning of March when interest rates started increasing. And with our government planning at least one, if not two more interest rate increases for the remainder of this year, real estate prices are very likely to drop further unless there's a considerable decrease in the number of listings. 

Now in a shifting market, such as the one we're in right now, there are always opportunities. And it's a great opportunity now for those who are looking to purchase. First, there is much more inventory on the market. There's over +40% more listings to choose from than there were last summer. Also in favour of purchasing, we're seeing more conditional offers. 

Now for those who purchased a property during the last couple of years when the market was a super hot seller’s market, there was a lot more pressure to make a purchasing decision very quickly since many properties sold within the first few days on the market. In that type of market, there wasn't the opportunity to submit conditional offers. So even if you wanted to conduct a home inspection, for instance, there really wasn't that opportunity. The home buying process was often frustrating and stressful for a lot of buyers, especially after losing out on multiple offers.

Now in our current market, the home purchasing process is a lot more relaxed and generally speaking, a lot less pressure on time. So for purchasers who felt discouraged from buying a property during COVID, I would encourage them to look into the market now. Prices have softened and there's much more inventory to choose from.

Now there is a minority of purchasers who have decided to hold off their property search in hopes that housing prices drop further. While it's likely that prices will soften a bit further as interest rates increase over the course of this year, I strongly encourage purchasers to consult with their mortgage broker and understand the full impact of increased carrying costs due to significantly higher mortgage interest rates later this fall or winter. Because while property prices might soften a bit further, keep in mind that as interest rates increase, your monthly carrying costs of ownership also go up. Understand the trade-off of waiting for real estate prices to soften a bit further, which is an upfront savings off of the purchase price, versus the impact of paying an ongoing higher monthly carrying cost. Depending on your financial situation, you'll want to make that informed decision yourself.

Another point for purchasers who are on the sidelines waiting for the market to possibly soften further, is to keep in mind that while most purchasers secure the right home within a two to three month search, some individuals might take a full year to find the right property. Based on your personal experience, if your property searches have taken longer than six months to secure the right place, consider what would happen if you wait to purchase a home and attempt to time the market, and what would happen if the right property was not found within that window of time when you felt the market is in your best favour in terms of pricing. By trying to time the market, ask yourself if there's a chance that the market could recover back to a seller's market by the time the right property is found for you. Or would interest rates be too high at that point where the monthly carrying cost is too high for you to carry your ideal home? These are some considerations you might want to reflect on.

My advice is, as long as you intend to purchase and hold on to a property for at least three years, then I strongly encourage purchasers to move forward when the right property presents itself, in order to not miss the right opportunity by attempting to time the market.

The Bank of Canada is making their next rate announcement on September 7th. A lot of us in the industry are anticipating the rates to increase again on September 7th. So if you're looking at purchasing a property this year, it's in your best interest to get a mortgage pre-approval and secure a 90-day rate hold to help protect yourself against an interest rate increase.

This wraps up our market update. 

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And in the meantime, if you have any real estate questions or needs, give us a call.