It is hard to believe that in fifteen months, the Toronto and region real estate resale market has gone from record-breaking sales and house prices to a precipitous decline, not seen in decades, to a market resurrection in May. Although May did not match the dizzying highs of February and March of 2022, resale results were impressive.
May marked the fourth consecutive month of rising sales. What was particularly impressive was the increase in the number of reported sales compared to April. The market reported 9,012 sales in May, a 20 percent increase compared to the 7,531 achieved in April and a 25 percent increase compared to the 7,226 reported sales in May 2022. Whether this accelerated pace can continue into June will depend on several factors unfolding in the coming months.
Although April's 7,531 residential sales were 5.2 percent less than the 7,940 sales achieved last year, they reflect growing buyer confidence and acceptance that the meagre financing costs enjoyed during the pandemic are a thing of the past. Demand has not diminished, and in face has pushed to extraordinarily high levels by growth in population in the greater Toronto region, driven by years of high levels of immigration. Between 2018 and 2022, more than 600,000 immigrants have moved into southern Ontario. Unfortunately, the new housing supply has not kept pace with this population growth.
As a result of the eye-popping demand, average sale prices continued to rise in April, even in the face of high mortgage financing costs and borrower stress testing which adds 2 percent to the interest rate at which borrowers are attempting to qualify. April's average sale price of $1,153,269 was only 7.8 percent lower than the average sale price in April 2022. When interest rates begin to decline, which is expected in 2024, we could see average sale prices increasing to the stratospheric heights achieved during the pandemic. Six months ago, this possibility was inconceivable.
The number of new properties coming to market became even more troubling during April. Only 11,364 new listings became available in April for the many buyers waiting to buy. A 38 percent decline compared to the 18,416 properties that came to market last April. More troubling is the available supply as April came to an end. At the end of April, there were only 10,373 active listings, more than 20 percent less than the 13,092 properties available to buyers at the end of April last year. In addition, April marked the first month since March of last year when active listings were fewer than the corresponding month the year before.
Given the demand and the lack of supply in the greater Toronto area, it is no surprise hat all available properties (on average) sold in only 17 days. The speed at which properties sold in April is quickly approaching the speed with which properties in the greater Toronto area sold during the height of the pandemic market - 8 days! All properties in the City of Toronto sold in only 18 days (slightly slower due to the preponderance of condominium apartment sales) but incredibly for 103 percent of their asking prices. In Toronto's eastern districts, all properties, condominium apartments, detached and semi-detached properties sold in only 11 days and for an eye-popping 109 percent of their asking prices. Semi-detached properties in the eastern districts sold in only 8 days at 115 percent of their asking prices. The average sale price of semi-detached properties in Toronto's eastern districts was $1,223,687; across all of Toronto, the average sale price for semi-detached was $1,326,462. Detached properties came in at $1,787,752.
Shockingly seven eastern districts reported less than five semi-detached property sales - simply because of the lack of supply!
The speed of sales, and prices exceeding asking prices, were not restricted to the City of Toronto. For example, all property sales in Halton, York, and Durham region sold well above their asking prices, 101, 105, and 107 percent above asking, respectively, with all properties selling (on average) after only 15 days on the market.
The Toronto and region residential resale market is quickly moving towards crisis levels. Governments now have no one to blame but themselves, and hopefully, they are beginning to accept that restrictive legislation cannot improve the housing crisis. At the federal level, there is a prohibition on foreign buyers from purchasing residential properties in Canada. At the provincial level, there is a 25 percent (of the purchase price) tax on foreign buyers. The municipal level (City of Toronto) has a 1 percent vacancy tax. These legislative actions must still address Toronto and the region's housing issues. As numerous studies have demonstrated, Toronto's resale market is driven by domestic demand. Population growth, which is expected to continue, requires appropriate levels of new housing, which have yet to be forthcoming. Therefore, it is safe to forecast that the residential resale conditions that have manifested themselves in April will continue and intensify as we move towards the second half of 2023.