October 2o22 is trending like much of the previous month with overall sales declining dramatically, there were 49.1% less than transactions than one year ago in the fall of 2021. The average sales price is down 5.7% year over year across all types of housing segments with the current average price across the GTA at $1,089,428. In the ‘416’ neighbourhoods the average price of a detached is $1,609,077 and in the ‘905’ regions $1,289.107.
Average prices don’t tell the fully story though-it’s a function of what has sold in the past month and not a reflection of pricing by housing type or location. This is important to note as the change in prices is not the same across all regions, neighbourhoods and price points. The changes vary by locale, housing type and neighbourhood. The numbers must be carefully examined to tell the complete and whole story of whats happening in your area of interest. The overall take away is changes to the market are happening and evolving but they are uneven and a local market analysis is a more accurate approach to understanding the nuances by neighbourhood, area and housing type.
So why is this happening? The No. 1 reason is an increase of interest rates and cost of borrowing making housing options less affordable and as a result demand has softened. The stress test adding +2% on top of the prime rate is keeping many potential buyers out of the market. The buyers may have good jobs and a strong downpayment but they don’t qualify at these higher stress tested rates. As a result the potential buyers are now becoming renters, they shifted into the rental market making this segment have dramatically higher demand and competition and hence we’ve seen a huge increase in rents over the past six months.
Investors to a large degree have stepped out of the market and some are moving out of the GTA to less expensive locations. There’s also a lot of noise in the media of impending doom and gloom, some of this is keeping buyers on the sidelines. Buyers and Seller take note and beware of the information you are getting from the media! Headlines do not tell the true tale. For the first time in a long time buyers have been given an edge. It’s also a good time for the move up buyer to capture a house that was previously priced out of reach and the softening has made some homes a little more affordable meaning a lesser downpayment is required.
The core of the city, most of the ‘416’ has seen a flattening of prices, fewer number of offers on offer night but the market is not at a standstill. We’re not in a buyers market everywhere just yet, its definitely more balanced but it all depends on where you are looking, the price point, etc. The good properties priced correctly are still selling. However, sellers may need to adjust their expectations going forward and a careful market analysis should be done prior to setting a list price. Quality time spent with your Realtor analyzing the data and working with a Realtor that really understands the micro markets must be done prior to embarking on a sale. The same goes with Buyers. Make sure you have an experienced Realtor working for you in this market. A Realtor that works in and understands the nuances of your neighbourhood. Look for an experienced Realtor that has good negotiation skills, provides a thorough real time Comparative Market Analysis (CMA), strong project management and quality marketing, someone who can help navigate the process.
I’ve been a Realtor for 20 years and have worked in all types of markets. I’ve seen a lot and know a lot and can assist you providing insights, knowledge and negotiating skills. For a detailed analysis on whats happening in your neighbourhood or area of interest I’d be pleased to take you through the numbers and provide in depth insight and analysis so you can make an informed decision on an important financial transaction you are embarking on.