The May 2022 Toronto Real Estate numbers are in! So instead of simply reading the news headlines and believing all that they say, I’m going to take a deep dive into what the numbers really mean. And things are starting to get quite interesting.
Just a few weeks ago, the Bank of Canada increased the overnight lending rate to 1.5%. And the result was absolute chaos – reading the headlines you would have thought the rate hike meant we’re back in the 1980s with rates sitting at over 20%.
But when you take a step back – it’s only 1.5%. Rates are still very, very low. Not as low as before, but you have to agree with me when I say they’re still at a low rate.
Many people are forgetting that even with the 1.5% rate hike, we’re still 0.25% lower than pre-pandemic times.
The Bank of Canada mentioned they might raise rates again in July, and the Governor of the BOC, Tiff Macklem, noted that they could rise “as much as 75 basis points.”
Many key economists agree that increasing interest rates this much, this quickly, is not going to benefit the economy, long term. It’s a worthwhile bet to say that the Bank of Canada is going to realize this and ultimately slow down quantitative tightening.
The second half of 2022 is going to be interesting to watch. Buyers are being cautious right now and are taking their time getting themselves into the right home for the right price. Sellers are realizing that the crazy market that was sparked earlier this year has come and gone, and the market as a whole is steadying out – which needed to happen.
A stable and steady market means that buyers can buy, and sellers can sell without a circus on either end.
Let’s take a look at each segment to see what’s happening in Toronto.
May 2022 Toronto Real Estate Numbers: Detached Homes
The detached homes market in Toronto has once again proven that slow and steady is the way to go. Year over year prices are up 16%, which is big. But if we continue to examine the monthly trends, we’ll see that prices are up only 3%.
This shows consistency in the market in this segment – it’s a sustainable growth that’s reliable. This segment also proves that it’s not highly impacted by rate hikes and inflation.
The number of new listings is up 28% and many would think that’s a big number – but that’s what happens in May. The Spring market is the hottest time of the year for real estate so of course that number would go up.
The number of sold transactions is down from the previous month, which again further proves that even with demand dropping slightly, pricing is still holding steady.
Detached market = stability. Period.
So, what’s to come this summer? A lot of my clients have been asking so here’s my take.
- Expect the number of listings to continue to grow as people want to make their move and get settled before the next school season starts up again.
- Prices will continue with this modest increase month over month
- Overall year over year price increases will continue.
Doesn’t sound very exciting, does it? But isn’t that what we want? A stable, uneventful market that is reliable. Sounds pretty good to me for the fourth largest city in North America.
Advice for sellers: as more homes are listed for sale, it’s crucial to make your home stand out. Buyers notice shortcuts and with many stunning homes on the market, you need to make sure no stone is left unturned – literally. Make your landscaping shine, do the extra touch-ups and simply go the extra mile. For top dollar, buyers today are looking for top-tier homes.
Advice for buyers: if you’re waiting for prices to come down within this segment of the market before buying, they won’t. They may stabilize slightly, but they’re not going to come down and the short- and long-term trends prove that. There is plenty of inventory in the market right now so enjoy the options and have confidence in the fact that buying the home you love now, is in fact the right move to make.
May 2022 Toronto Real Estate Numbers: Semi-Detached & Row Homes
This is one segment of the market that we’ve been keeping a close eye on, because as I predicted, they would be the most sensitive to even the slightest rate hike.
Year over year prices are up 3%, which we can essentially call close to being flat. The month-over-month prices are down 6% and I’ve been getting a lot of questions about what is driving that lower number.
My take on that month-over-month decline is due to the very highly motivated sellers who purchased first, before the mortgage rate hike, and now NEED to sell. Now, this isn’t just a shot in the dark as the basis for this reasoning – when we look at the quantity sold, month over month, that number is flat – no decrease in the number of real estate transactions, yet the prices have gone down 6%. Activity is stable but sellers are taking less for their homes.
The average number of days on the market is also down – from 15 days in April to just 9 days in May. This is a major shit. It shows consistency in demand but the readiness and motivation of buyers to pull the trigger, plus the pressure on sellers to get their homes sold.
Buyers that have had their pre-approvals in hand prior to the rate hike are winning here, as they’re coming up against a motivated seller and the power to buy all at the same time.
Most rate holds are anywhere from 90 to 120 days, so a buyer that has a locked-in rate needs to buy right now.
Advice for sellers: If you are not in a situation where you have to sell, don’t. Wait out this 90-120-day pre-approval cycle and look at the fall market as the optimal time to sell. Take this summer to make improvements, paint, jazz up your landscaping and prepare your house to shine for the big fall market.
Advice for buyers: if you have a pre-approval in hand, act now. Prices are not going to come down enough to make up for the extra you’ll be paying for a home when you are forced into a higher rate. Get into the market and start making offers – you’ll take a lot of stress off of yourself by eliminating that ticking clock on your pre-approval.
Toronto Condo Market: May 2022
The numbers for the condo market in May are interesting to look at. The year-over-year prices are up 7% – not as big of a jump as we’re used to, but they are still up a healthy amount.
When we look at the month-over-month numbers, we do see a decline of 7%. Can we say that rate hikes had an impact here along with the inflated media headlines? My guess is yes. This is where we see many first-time buyers entering the market – buying starter condos as they move into the city starting new jobs, or returning to the city after the pandemic moved them away.
Any nervousness about buying, interest rates and essentially paying more will make first-time buyers take a slight pause to reassess.
The number of new listings is up by 13%, but again, this is expected within the month of May as the Spring market gains momentum. But the number of sold transactions month over month is down 15%, pointing to a hot April with the threat of rate hikes looming.
Is this just stability in the condo market? I’ll be watching this segment carefully over the next few months to see what the trends show.
My prediction for the summer is we’re going to see a big growth in the Toronto condo market. With the return to the office happening, and the huge influx of international students coming into the city, the condo market will be nothing but up, up, up from here on in.
Pre-Construction Condos in Toronto
So I wanted to include a quick note about the Toronto pre-construction condo market – two major launches are coming up very soon. Forma Condos launches this Thursday, June 16th and next week on Tuesday, June 21st is the launch of the next phase of the Brightwater development in Port Credit, Bridge House.
I have so many clients that are amped up to purchase as these are long-awaited developments and it’s exciting to see the passion for investing in Toronto.
It will be interesting to see how quickly these sell, what suites are selling the fastest and what the appetite is for pre-construction both downtown and just outside of the city among new buyers and new investors.
If you’re interested in getting pricing and floor plans on launch day, simply sign up on my project profile pages. I’m a VIP broker for each of these projects so I’ll have access and details first.
Bridge House at Brightwater Condos
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 with you right away. I’d be happy to answer any questions about the March 2022 Toronto real estate numbers you have or about the Toronto market in general and share my insights on what’s to come later this year.
~Romey Halabi
Founder & Lead Broker, Toronto Realty Boutique
416-999-1240