Toronto Regional Market Report - February 2023

The Toronto real estate market reached its peak in February 2022, just before the Bank of Canada raised its interest rates. As we entered February 2023, uncertainty prevailed regarding which way the market would swing, up or down.

Sellers and buyers were both apprehensive, with the former undecided on whether to sell their property or rent it out due to rising rental rates, while the latter were eager to purchase a home, yet unsure if it was the right time or if they should wait for the spring market. Consequently, the demand for housing increased while the supply remained low.

Towards the end of February, the real estate industry experienced successful bidding wars of up to ten offers for properties that were adequately marketed and staged. There were even cases of bully offers, or pre-emptive offers made for all types of housing and price ranges. The February TRREB's statistics were indicative of this trend:

February sales in the Greater Toronto Area (GTA) were down substantially from the pre-rate hike levels of early 2022. However, the number of new listings also dropped substantially year-over-year. The result was that the average selling price and MLS® HPI continued to level off after trending lower through the spring and summer of last year.

“It has been almost a year since the Bank of Canada started raising interest rates. Home prices have dropped over the last year from the record peak in February 2022, mitigating the impact of higher borrowing costs. Many homebuyers have also decided to purchase a lower priced home to help offset higher borrowing costs. 

GTA REALTORS® reported 4,783 sales through TRREB’s MLS® System in February 2023 – down 47 per cent compared to February 2022, the last full month before the onset of interest rate hikes. The number of new listings entered into the system was down by a similar annual rate of 40.9 per cent to 8,367.

“New listings continued to drop year-over-year in the GTA. Recently released Ipsos polling suggests buying intentions have picked up for 2023. This 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, especially those catering to first-time buyers facing increased rental costs,” said TRREB Chief Market Analyst Jason Mercer.

The average selling price for February 2023 was $1,095,617 – down 17.9 percent compared to February 2022. Some of this decline is attributable to the fact that the share of sales below $1,000,000 was 57 percent in February 2023 versus only 38 percent a year earlier. On a monthly basis, the average price followed the regular seasonal trend, increasing relative to January 2023. The MLS® Home Price Index (HPI) Composite Benchmark was down year-over-year by a similar annual rate of 17.7 percent, but was also up on a monthly basis.

FEBRUARY TRREB Market Report