Toronto Housing Market: Prices, Trends, Forecast 2023

The Toronto housing market has been a topic of much discussion and analysis over the past few years. After experiencing a period of rapid price growth and high demand, the market has seen significant changes in response to economic and policy factors. As we move into the second half of 2023, there are many questions about what the future holds for the Toronto housing market. Will prices continue to decline? Will demand rebound or remain subdued? In this article, we will examine the latest trends and data from the Greater Toronto Area (GTA) housing market, as well as forecast what we can expect to see in the coming months.

Toronto Housing Market Trends for 2023

The Toronto real estate market is a dynamic landscape that continuously evolves, driven by various economic factors and trends. The Toronto Regional Real Estate Board (TRREB) releases regular market reports to provide insights into the state of the market, helping both buyers and sellers make informed decisions.

The average home sold price in the Greater Toronto Area (GTA) increased 3% year-over-year to $1,119,428 for September 2023. Despite being in deep buyer’s market territory for the first time in 14 years, Toronto home prices continued to increase on both a monthly and annual basis.

Toronto Housing Price Trends by Property Type

• Detached Home Prices: The average price of a detached home in the GTA was $1,440,786 in September 2023, a 5.2% increase year-over-year and up 2% month-over-month.
• Semi-Detached Home Prices: Semi-detached homes prices increased 5% year-over-year to an average price of $1,094,074.
• Freehold Townhouse Prices: Freehold townhouses are seeing prices up 2% monthly to $1,043,076, up 5% year-over-year
• Condo Apartment Prices: Condos were the only property type to see an annual decrease in home prices, falling 3% year-over-year to $707,065, up 0.2% monthly.

Current Housing Market Conditions in Toronto

The Greater Toronto Area (GTA) housing market plunged into a deep buyer’s market in September 2023, the first time that the GTA has been in deep buyer’s market territory since January 2009. This is caused by a strong surge of new listings flooding the market as sluggish sales numbers fall behind. Despite this historic development, GTA home prices continued to tick upwards compared to last month, with home prices remaining higher on a year-over-year basis as well.

For the month of September 2023, the GTA’s average home price was $1,119,428, which is a 3.4% monthly increase and a 3% year-over-year increase. That’s the first time that GTA home prices have risen on a monthly basis since May 2023, after Bank of Canada’s rate hikes in June and July 2023 threw speed bumps and cooled housing market. These rate hikes and higher bond yields have pushed up mortgage rates in Toronto, with posted 5-year fixed mortgage rates at the highest level since 2008.

As the cost of borrowing increases, more and more buyers are waiting on the sidelines as they take stock of their situation and assess their mortgage affordability. There were 4,642 home sales in the GTA during the month of September 2023, down 8% from the same period last year. That’s also a 12% monthly decrease in sales.

The main highlight for this month is the surge in new listings, up 32% from last month and up 45% year-over-year to 16,258 new listings. This brings the sales-to-new-listings ratio (SNLR) to 28.6%. With a SNLR of 40% and below indicating a buyer’s market, in which market conditions are in the favour of buyers, this should relieve some pressure on buyers as they shop for a home. With fewer buyers competing for a larger inventory of homes, there will be downwards pressure on Toronto home prices.

Regional Comparison

City of Toronto

City of Toronto home prices are surging with a strong 11% monthly increase to $1,119,452 for September 2023, which is a 5% year-over-year increase.

York Region

Home prices in York Region, which includes Markham, Vaughan, and Richmond Hill, have decreased 1% month-over-month to $1,330,636.

Looking Forward

With the housing market firmly in buyer’s market territory, those looking to buy a home in Toronto might start seeing some deals on the horizon as the region’s sales-to-new-listings ratio (SNLR) dips to a 14-year low. It’s expected that Toronto home prices will fall over the next few months. Meanwhile, the average sales price to listing price ratio was 100% this month, meaning the average home sold at its asking price.

Toronto Housing Market Forecast 2023

As we step into the second half of 2023, the Toronto housing market continues to be a subject of interest, given its dynamic nature and the various economic factors at play. The insights from the July 2023 TRREB Market Watch report provide a foundation for understanding the current trends and predicting the possible trajectory for the remainder of the year. Let’s explore what might be in store for the Toronto housing market in the coming months.

1. Continued Sales Resilience

The positive momentum in home sales observed in the first half of the year is likely to persist in the latter part of 2023. Despite the impact of rate tightening by the Bank of Canada and economic uncertainties, the GTA real estate market has showcased its ability to adapt. Homebuyers have demonstrated their willingness to adjust to higher borrowing costs, which indicates a certain level of stability in the market.

However, the pace of sales growth might be more tempered compared to the earlier months of the year. The effects of monetary policy changes on consumer behavior are expected to play a significant role in shaping this trend. As potential buyers evaluate the implications of higher borrowing costs, they may take a slightly more cautious approach to their purchasing decisions.

2. Moderating Price Growth

While the trend of rising home prices is likely to continue, it’s expected to moderate compared to the significant increases seen in recent years. The July 2023 TRREB report highlighted a year-over-year increase of 1.3 percent in the MLS® Home Price Index Composite benchmark. This indicates a more stable and sustainable growth pattern.

Buyers and sellers should anticipate a more balanced pricing environment. This can be attributed to a combination of factors, including the adjustments made by buyers to adapt to higher borrowing costs and the ongoing efforts to address affordability concerns. The gradual nature of price growth could also encourage more potential buyers to enter the market, which might help maintain a healthy level of demand.

3. Focus on Affordability and Policy Changes

The question of housing affordability remains a central concern, not just for homebuyers but also for policymakers and industry stakeholders. The July 2023 TRREB report emphasized the need for coordinated efforts from all levels of government to address this challenge. While immediate changes might not be drastic, the remainder of 2023 could see continued discussions and initiatives aimed at enhancing housing affordability.

As the federal government’s immigration targets continue to drive population growth, the pressure to create more affordable housing options will intensify. This could lead to further policy interventions and incentives to encourage the development of both ownership and rental housing that caters to a diverse range of buyers and tenants.

Conclusion: A Balanced Outlook

The Toronto housing market forecast for the remainder of 2023 suggests a balanced outlook characterized by resilience, moderated price growth, and a continued focus on affordability. The market has shown its ability to adapt to changing economic conditions, which bodes well for both buyers and sellers. While the pace of growth might not be as rapid as before, this steadier trajectory could contribute to a more sustainable and stable market.

According to Re/Max Canada’s housing market forecast for 2023, the average price of a home in the Greater Toronto Area is projected to decrease by about 12 percent over the following year. According to Re/Max Canada’s housing market forecast for 2023, the average price of a home in the Greater Toronto Area is projected to decrease by about 12 percent over the following year.

Amid rising interest rates and a looming recession, RE/MAX Canada is anticipating a modest decline of 3.3 percent in average residential sales prices across the country in 2023. The estimates are based on surveys of RE/MAX brokers and agents from coast to coast. In sharp contrast to 2022, most regions analyzed in the report will experience more balanced conditions in 2023 – a trend that’s already starting to materialize as a result of current economic conditions.