October 2023 Real Estate Market Update
Primarily due to higher interest rates, many would-be buyers are still waiting on the sidelines, which is driving housing demand lower. Home sales continued to decline in October throughout most of the Greater Toronto Area. On a year-over-year basis, sales are down 5.8% compared to last October. Sales are also down compared to September 2023. The amount of new listings in October jumped significantly compared to the 12-year record low in October 2022, and are steady compared to the previous month. Average selling prices are still up 3.5% compared to last year, and have remained mostly unchanged compared to September. Much higher amounts of housing inventory and low sales indicates we are experiencing a buyer's market. Although demand is lower and there are more available listings for buyers to choose from, competition amongst buyers has remained high enough to keep prices steady. Home prices are still well below the record peak in early 2022, allowing lower home prices to mitigate the impact of higher borrowing costs to some degree. As the winter market approces, it is unusual to see the high amounts of housing inventory that we are currently experiencing. Many listings are sitting on the market unsold because sellers are unwilling to realize that prices have come down in most markets compared to the spring of 2023. Many homeowners are looking to downsize or rent instead of owning due to rising mortgage payments and overall higher costs of living. Overall, a variety of economic conditions are contributing to today's unique real estate market. To see how prices have been affected in your area, click the link below to get access to TRREB's October Market Statistics for all areas in the GTA. The stats are broken down by average sales price, number of homes sold, number of new listings, and average days on market for each property type; detached, semi-detached, townhouses, and condos. https://trreb.ca/files/market-stats/market-watch/mw2310.pdf If you want to know more about what is happening in your specific area, you can book a call with me by clicking the link below. https://calendly.com/davidrizzuto/consultation-call?back=1&month=2023-05
The Canadian Economy's Response to Rising Interest Rates
Canadians are not feeling optimistic about the short term future of the Canadian economy. Many are expecting inflation to remain high for the foreseeable future, and that the impact of high interest rates is far from over. One third of Canadian businesses expect a recession in the next year. Business confidence is the lowest we have seen in more than a decade, as most businesses are reporting slowdowns in sales growth, and one third of Canadian businesses are experiencing outright declines. More than half of all Canadians are also expecting a recession to hit in the next year, which is up 50% compared to last quarter. Most discretionary goods are seeing a slowdown in demand. The real estate market is also experiencing a slowdown caused by decreasing demand. The Bank of Canada's aggressive interest rate hikes seem to be working as intended to slow down the economy. The latest inflation report indicates a slowdown in inflation to 3.8%, which is down from 4% in August. However, this is still considerably higher than the Bank of Canada's goal of 2%. Canadians are actually starting to see some financial relief in the grocery aisles, as the cost of some goods begin to lower for the third straight month. The cost of gasoline is also falling, but still up 7.5% compared to the same time last year. The labour market is also tightening, as intended, with unemployment rates inching higher. Many experts are now predicting that the Bank of Canada will hold interest rates steady come October 25th, due to the latest reports. Due to the higher interest rates, two in five homeowners are close to or above their maximum affordable mortgage payments. Homeowners with variable rate mortgages have been hit exceptionally hard, with 85.1% of variable rate mortgage holders reporting they have been negatively affected. Despite these findings, the Bank of Canada has said that most fixed rate mortgage holders will be able to meet higher payments at renewal and think the likelihood of default is low. Many financial institutions are predicting that interest rates will hold steady until mid 2024, and will then start to decline. The interest rate is expected to reach the neutral 2.25% by mid 2025.
September 2023 Real Estate Market Update
September 2023 Market Update: The Greater Toronto Area real estate market continued to slow in September due to a variety of reasons. High borrowing costs, high inflation, slower economic growth, and uncertainty regarding monetary policy are all major factors that continue to weigh down the GTA housing market. September saw an increase in the number of new listings compared to August, and a drastic increase compared to the record low in September 2022. Historically, due to more activity in the real estate market in the fall, this is generally expected. However, the number of sales did not increase with the number of new listings. Sales are down in all GTA market areas in September 2023. Less sales and more listings is resulting in more options for buyers and more days on market. Despite the increase in inventory, average selling prices have been steady over recent months, and are actually up 3 percent compared to the same time last year. In the short term, buyers are experiencing more negotiating power and sellers are having a more difficult time selling compared to earlier this year. This trend is expected to continue into the winter and possibly the spring, as interest rates are projected to remain steady or slightly increase in the next couple of months. Looking past this, experts predict that the interest rate will begin to lower in mid-2024. As the interest rate lowers, we will likely experience an uptick in demand for homeownership during the second half of 2024. For those that are looking to make a move, now might be the right time. With more inventory comes more choice and an overall upperhand for buyers. Buyers may be able to negotiate longer closings and favorable terms and conditions that can assist with selling in this market, if you must sell before you buy. This is also a great time for first time buyers to get into the market. With much more inventory and much less competition compared to earlier this year, first time buyers are able to secure favorable terms and fair prices. Although interest rates are high, prices are expected to increase considerably as interest rates come down. With many short term mortgage products available, buyers can cope with the high rates for a short period of time, but reap the benefits of a lower purchase price. It is important to note that the purchase price is permanent, but the interest rate is only temporary. To see how prices have been affected in your area, please click the link below to get access to TRREB's September Market Statistics for all areas in the GTA. The stats are broken down by average sales price, number of homes sold, number of new listings, and average days on market for each property type; detached, semi-detached, townhouses, and condos. https://trreb.ca/files/market-stats/market-watch/mw2309.pdf If you want to know how the latest market changes affect your real estate plans, you can book a call with me by clicking the link below. https://calendly.com/davidrizzuto/consultation-call?back=1&month=2023-10
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