Strong start pushes Toronto real estate prices up in 2022

Toronto region home prices rose 8.6 per cent year over year in 2022 despite months of declining sales and month-over-month price dips.

The average selling price of all GTA homes was $1.19 million last year, up from $1.1 million in 2021, the Toronto Regional Real Estate Board (TRREB) reported on Thursday.

The annual gain was due mainly to the strength of last January and February’s market when prices peaked at $1.33 million. In March, the Bank of Canada began raising interest rates and that slowed activity but didn’t immediately push down prices on a yearly basis, said Jason Mercer, the real estate board’s chief market analyst.

“Even as we moved through some of the summer months, we were still seeing prices up on a year-over-year basis,” he said.

“But that annual rate of growth was certainly trending lower through the year at the point where now we’re obviously down on a year over year basis,” said Mercer.

In December, the average selling price, including all types of houses and condos, fell 9.2 per cent year over year to $1.05 million, from $1.16 million in December 2021.

Sales were down 38 per cent annually in 2022. In December they fell 48 per cent.

The 152,873 homes listed for sale last year also dropped 8.2 per cent from 166,600 in 2021. In Dec., new listings plunged 21 per cent.

Detached, semi-detached and townhome prices fell between 13 and 14 per cent last month across the GTA, compared to a one per cent decline in condo prices. Detached houses sold for $1.38 million on average and condos went for an average $705,659.

Generally the 905 communities saw the biggest drop in home prices. Detached houses in the City of Toronto fell 4 per cent to an average selling price of $1.63 million, compared to 905 detached homes, which fell 16.4 per cent to $1.31 million on average.

The real estate board won’t release its 2023 price and sales forecast until early Feb. But this year’s housing market will be determined by the opposing forces of higher interest rates that temper buyer activity and heavy demand for housing, fed by rising immigration, said Mercer.

He expects housing market discussions in the first half of the year will continue to revolve around interest rates, which have gone up five times since March — from .5 per cent to 4.25 per cent in December.

Even if you put population growth aside, in the first part of 2023, a lot of would-be home buyers will be making a decision about whether and how to move forward, he said.

“Some of them will decide to purchase in 2023. But what they’re purchasing or where they’re purchasing or both may have changed,” said Mercer.

“If you look at past rate hike cycles and the impact on the housing market, you know that that can take a year to 18 months, to start to play itself out,” he said.

A shift to renting among buyers who might have otherwise purchased their first home in the last 10 months has made for double-digit rent increases in the GTA’s already tight rental market.

Research for the real estate board has found that immigrants, who are arriving in Ontario at record levels, have a greater propensity to buy a home, although not immediately, said Mercer.

“A lot of those (newcomers) are going to be focused on the GTA and broader Greater Golden Horseshoe and they’re going to need a place to live. Some will choose to buy, others will choose to rent. But either way, they will put pressure on an already constrained housing supply,” he said.

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