The February 2023 Toronto real estate numbers are in so it’s time to take a deep dive into what they really mean, versus what is simply reported without any context.
Before we get into the February 2023 Toronto Real Estate numbers, I wanted to take a look at the announcement from The Bank of Canada yesterday, and what that means for the Toronto market right now, and in the coming months.
March 8th Bank of Canada Interest Rates Announcement
The Bank of Canada has decided to keep its overnight rate target at 4.5% and continue its quantitative tightening policy.
Economic developments globally have aligned with expectations, with slowing global growth and decreasing inflation due to lower energy prices.
In Canada, economic growth was weaker than expected due to a significant slowdown in inventory investment, but the labor market remains tight, with wages continuing to grow.
Inflation eased to 5.9% in January, but food and shelter prices remain high. The Bank expects CPI inflation to come down to around 3% in the middle of this year. The Governing Council has decided to maintain the policy rate at 4.5%, but the Bank is prepared to increase the policy rate further if necessary, to restore price stability.
So, what does that mean for Toronto Real Estate? Overall, this is a very good sign for both the market and the economy in general. This is the first time in a year that the Bank of Canada held rates. This means the Bank of Canada feels what they’ve done is working, and if things remain the same, they’ll continue down this path.
In the coming months, we’re likely to see fixed rates start to trend downwards, bringing confidence back to the market and increasing buyers buying power. Rates go down, pre-approvals go up, and the market will start to pick up rather quickly. I’m predicting the late spring and summer will be a very busy time for Toronto real estate.
But this doesn’t come without caution to buyers and sellers. I predict we’re going to see a very quick rebound, but that will likely be short-lived. The Bank of Canada will have its eye on what’s happening and will react to ensure things are kept at a very steady pace.
My advice – if you’re thinking of buying or selling and are wondering when or how, get yourself situated to move quickly. You want to set yourself up for success – if you’re a buyer, you’ll want to make a move when you see inventory picking up – the perfect storm of the spring market + rate holds means it’s time to buy.
If you’re selling, you’re going to need to be ready to list when you see days on the market go down and pricing start to go up. (By the way, this is already happening now).
The Overall Market: February 2023
A few quick notes about the overall market in February before I dive into each segment.
To be brief, what we’re seeing in the month-over-month trends is pricing is starting to trend upwards and days on the market go down. This is the FIRST sign that buyers are starting to become more active.
I saw an interesting headline in yesterday’s Globe and Mail that actually made me nod in agreement – “Bully offers and bidding wars are back in the Toronto real estate market”.
I’m seeing this personally, as I had three major listings sell during the month of February. The number of showings was dramatically up, and the number of offers and serious inquiries were also way up.
In fact, one of these properties sold in multiple offers after being listed for a few months. This is a major sign that no one should be glossing over.
February 2023 Toronto Real Estate: Detached Homes
First, we should continue to examine some of the numbers that aren’t usually reported widely.
The year-over-year quantity sold is down 27%
Year over year new listings are down 21.4%
The year-over-year days on market are up from 11 days to 16 days
The big alarm going off here within the detached segment is that giant drop in the average price in February 2023 from 2022 – by 23%. That’s a huge number that we can’t ignore. So let’s look into it further.
Whenever there is such a huge drop in pricing, there is always a reason behind it. So as I usually do, I went directly to the Luxury Market to see what’s going on there. And as always, it had a major impact on this segment this month.
In February 2023, there were 11 homes sold above $4 Million.
In February 2022, there were 44 homes sold above $4 Million.
When we back out the luxury market effect, our new average price of a traditional detached home in Toronto looks like this:
February 2023 = $1,979,274
February 2022 = $2,335,722
This means the average price is down 15.3% – still a major number but not 23%.
I like to do this exercise because the majority of detached home buyers are either looking at or living in homes that are less than $4 Million. This gives a better idea of what’s happening for most people within this segment.
Even when we back out these numbers when looking at the month-over-month trend, pricing is still going up which is a very good indicator for the Toronto market.
My Advice for Sellers: Don’t be scared off by that year-over-year number. If you’re looking to sell, you need a Realtor who can do a deep dive into your neighbourhood and what’s happening there. The luxury market has a huge impact so this segment should be treated on a case-by-case basis.
If you’re looking to sell to move up into a bigger home, this is the time. With pricing trends being up month-over-month, the bottom is passed us and if you don’t act now, you may miss the boat.
My Advice for Buyers: Again, now is the time. We’re going to continue to see an upwards trend on pricing so more homes will be coming on the market. Get out there and look, get your pre-approval lined up and be ready to make a move. Timing is everything here and you don’t want to miss out on your big opportunity.
February 2023 Toronto Real Estate: Semi-Detached and Row Homes
First, we should continue to examine some of the numbers that aren’t usually reported widely.
The year-over-year quantity sold is down 38.3%
Year-over-year new listings are down 32.5%
The year-over-year days on market are up from 9 days to 17 days
One of the first things to note within the semi and row home segment is the correlation between the quantity sold and new listings – they’re pretty even as noted above. This makes sense and is how the numbers should look – lower listings, lower solds. This is a good thing, even though they are both still down significantly.
Pricing is also down 12% in this segment year over year, but when we look at the month-over-month, it’s actually up 8%. This is also a good sign for the spring and summer markets, should we keep this momentum going.
As this segment is the most interest rate sensitive, we’ll see the impact of the rate hold and fixed rate decrease here very soon. Buyers will be getting comfortable once again within the next couple of months, and sellers will like what they see with the trend in pricing swinging upwards.
When I look back at the numbers over the past few months within this segment, we see the following:
December 2022 Average Price = $1,274,359.00
January 2023 Average Price = $1,362,690.00
February 2023 Average Price = $1,472,492.00
So, this is nearly a steady $100,000.00 increase month over month since December. Think about that – the average price of a semi-detached / row home has increased by nearly $200,000.00 in just two months. Where are those headlines???
My Advice for Sellers: the market is back. If you’re thinking of selling, I’d bet on getting your home listed before the spring rush. You don’t want to get caught up in the influx of inventory that’s going to be hitting the market.
Get yourself set up for success with a solid Broker who has a timing and marketing strategy that’s going to get your home sold for the right price and at the right time in the market.
My Advice for Buyers: as I said before, the winter is going to be the best time to buy. And that time is nearly over. Get into the market now. There are some amazing listings out there that are going to start to get snatched up by eager buyers looking to get a lower price than say, next month or in the Spring market. Look at homes and pick one that you love before it’s too late.
Toronto Condos
First, we should continue to examine some of the numbers that aren’t usually reported widely.
The year-over-year quantity sold is down 49.6%
Year over year new listings are down 27.2%
The year-over-year days on market are up from 19 days to 22 days
Pricing in the Condos segment is typically pretty stable – we don’t usually see a drop in pricing by 9%, but this month, we do.
So, what’s happening? When we look at this time last year – February, March and even into April and May, we can see that rates started to slowly climb, and rumblings had started about even more interest rate hikes.
Buyers were rushing to the market, getting their pre-approvals lined up and buying before things changed. During the first half of 2022 we had record highs for pricing and transactions within this segment. Another proof point of this high is in the 2023 year-over-year quantity sold – which is now down nearly 50% in February! The market was on fire this time last year – there is no denying that.
So it’s no wonder we’re seeing a drop in February’s numbers right now – and I expect that to continue with the March and April numbers as we continue to compare things to the 2022 spike.
But, at the same time, we should examine the month-over-month trends to inform what we have in our cards right now. I always say real estate isn’t traded month to month, and I stand by that, but what the month-over-month numbers are good for is to look at how the market is trending.
And right now, condo prices are trending up which is a very good sign for things to come this spring and summer.
My Advice for Sellers: If you’re thinking about selling your condo, you should be keeping your eye on the trends over the next few months. You’ll want to time things so you list when the market is starting to peak, but isn’t inundated with listings.
Timing is incredibly important here so get ready – paint, update finishes – get everything set so you can get your condo listed within the right timing to get the most money possible in the shortest amount of time on the market.
My Advice for Buyers: this may sound like a broken record, but as I’ve said in each segment, the winter will be the best time to buy real estate in Toronto, and that goes for the condo segment too. The waiting game is over – get out there and buy now because pricing has started to trend upwards and the bottom has passed. Don’t miss out and have regret later – trust me.
If you’re thinking about buying, selling, or investing and want to discuss strategies, pricing, timing, or anything else, simply complete my form on this page so I can get in touch right away. I’d be happy to answer any questions about the March 2023 Toronto real estate numbers you have or about the Toronto market in general.
~Romey Halabi
Founder & Lead Broker, Toronto Realty Boutique
416-999-1240