Toronto Real Estate in 2023 – What’s really going to happen? The Toronto market is a very hot topic right now and I’m sure you’ve been seeing plenty of headlines that cover everything from “the bubble is about to burst!” to “it’s going to be the best year yet!” – but, what’s actually the truth?
With my 14+ years of experience working as a broker in the Toronto real estate industry, coupled with my background in Finance and Accounting, I’m able to look beyond the headlines and report on what the numbers really mean, and what they mean for the future of the market.
Each month I study the reports and provide my clients with insights that go beyond the headlines.
You can read some of them here if you’re interested:
March 2023 Toronto Market Insights
So, what’s been happening in 2023, and what can we expect for the rest of the year? What’s going to happen as interest rates are normalized? Are we going to see a sudden spike in prices and a return to bidding wars and competition? Or will buyers continue to have the advantage as they do now?
Like I say every year, no one has a crystal ball – but I do a deep dive based on facts, numbers, and trends – I’m not simply going to say what you want to year. Let’s take a look.
The Current State of the Market
During the first few months of 2023, we were experiencing what many would call a “down market”. And right now, we’re experiencing somewhat of a rebound within the Toronto market, but I have a different take on what this market actually looks like.
Let’s start with the down market, which isn’t actually a scary thing. It’s simply the other side of the coin. Homes are still trading on a daily basis, and yes, pricing is down slightly year over year, but buyers are still buying and sellers are still selling.
We also need to look at control in the market – who is in the driver’s seat. Earlier this year we can say with confidence, it was buyers. When buyers are in control it’s usually seen as a down market because month over month pricing isn’t going up by double digits like they did in 2022, there were no bidding wars and the feeding frenzy wasn’t happening as it did last year, during the peak of the market.
Let’s take a quick step back for a moment. We know that the first few months of 2022 were a record year in all market segments. We had inflated prices, bidding wars, bully offers and tough competition. So, what did we think the market was going to look like in 2023? There was no way we would sustain that type of growth – I work in this industry and can tell you that type of growth and inflated pricing cannot and should not last. So here we are.
The market is right now is seeing a steady rebound from earlier this year, when it was very slow. Transactions were down, pricing was down and the number of days on the market were high – all key trends to examine on a month-by-month basis to get a good temperature check on what’s currently happening.
But right now, as we sit in the middle of the Spring market, things are heating up. Those that are still waiting for the market to “bottom out”, I’m sorry to say but you’ve missed the boat. Now you may be asking how I can say this when the year over year numbers continue to trend lower than what they were in 2022. But there is a very logical explanation for that.
The first quarter of 2022 was the height of the Toronto market – we were seeing double-digit growth in nearly all segments – and that’s because many were rushing to the market to purchase with their ultra-low pre-approvals.
Let’s remember that last year at this time, we were into the very first (of many) rate hikes. Panic was starting to bubble, and the rush was real. The proof of that was in the 2022 numbers. So, where we are at today is a reflection of what was happening last year, so don’t be surprised by the monthly numbers for the next little while.
Some good news regarding rates is that we’re into the second rate hold of the year already. This is giving confidence back to the market and buyers and sellers are on the move. The next Bank of Canada meeting is on June 7th and it’s honestly hard to predict what will happen. If unemployment numbers stay as low as they are or drop even lower, the Bank of Canada may be forced to act.
So, when we look at the summer trends and what’s to come in the fall, I’m going to stand by my original prediction and say NOW is the time to buy. Don’t be left behind (even further) when things start to really pick up. And when you look at the trends, it’s already slowly starting to happen. Are we going to see a massive jump in the next two months? Hell no. So, you have time. But get on it. I promise.
One of my favourite takes on real estate is that you make money on the buy, not on the sell. So, remember that as we sit in today’s market.
Let’s state the facts of the market right now, at this moment:
- Interest rates are up but holding; for now.
- The number of transactions is down year over year, but monthly, starting to trend upwards
- The number of new listings is down year over year, but monthly, starting to trend upwards
- The number of days on the market is up, but monthly, starting to trend upwards
- The rental market is up and continues to climb
What does this say? The market is picking up and many are still watching and waiting. We’re not going to see the numbers that we saw early in 2022, so rather than comparing to the height of the market, let’s take a look at what’s happening now, and what’s coming for the rest of the year.
But what we’re experiencing right now is the perfect storm for the well-qualified buyer. Be that someone that is renting and looking to buy for the first time, or the buyer who is looking to upgrade.
A first-time buyer isn’t paying the inflated costs that they would have last year, and the up-sizer now as an opportunity to finally make a move. Sure, the up-sizer might be getting slightly less for their home on the sell, but they’re also buying without competition, bidding wars and inflated prices, giving an even bigger advantage in today’s market.
But even with all of these facts favouring the buyer, many are in a wait-and-see position. These types of markets don’t last long, and they’re historically followed by big rebound years. So, set your fears aside and don’t believe the click-bait headlines. Look at the numbers that show what’s really happening in the Toronto market. Not the Ontario market or the Canadian market – better yet, look at what’s happening on your street and in the neighbourhood you’d like to live in.
Don’t let the wait-and-see strategy turn into a wait-and-see how much you missed out on strategy. One of the biggest mistakes buyers are making right now is waiting too long. The Bank of Canada has paused interest rate hikes and has indicated that they won’t be raising rates again this year. This coupled with falling fixed rates is creating the perfect storm for a sudden spike in the market.
What Will Fuel the 2023 Toronto Real Estate Market
I’ve taken a look at what will impact Toronto Real Estate in 2023 and how each segment will perform – detached homes, semi-detached & row homes, condos, and even the pre-construction market. I’ve also included some notes about Interest Rates, and have given some advice if you’re considering buying or selling in 2023.
Click below to download my complete analysis and if you have questions, want to set up a time to chat about buying or selling, want to discuss strategy or you’d like a free home valuation, get in touch with me right away.
~Romey, Founder & Lead Broker – Toronto Realty Boutique
Romey@TorontoRealtyBoutique.com
C: 416.999.1240
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