Only 4,544 residential properties were sold in the greater Toronto area in November. This is the lowest monthly sales recorded in 2022 and almost 50 percent fewer than the 8,979 sales reported for the same month last year. It has been nearly 15 years since the market has seen numbers as low as those produced in November.
Although the average sale price has declined substantially since the spring, it has dropped by almost 20 percent; it appears to have stabilized. In November, the average sale price for all residential properties sold in the greater Toronto area, including condominium apartments, came in at $1,079,395, a 7.2 percent decline compared to last year.
Average sales prices in the 905 Region have, since the pandemic market peak in February and March of this year, declined more dramatically than in the City of Toronto. This is because the exodus from the city and its dense living conditions that drove prices up in the communities surrounding the city has dramatically dissipated. With that dissipation, average prices have declined.
One of the factors keeping average sale prices from falling below $1 million has been the lack of supply. In November, only 8,880 new properties came to market compared to 10,044 last year, a decline in inventory of almost 12 percent. At this point in this evolving market, sellers are not under any pressure to get their properties on the market and sold. Most property owners in the greater Toronto area have locked into very favourable mortgage financing. As a result, they appear to be prepared to wait for improved market conditions before bringing their properties to market.
Buyers are still in the market, notwithstanding the shifting market landscape. In addition to the lack of supply, they are constrained by the lack of affordability caused by rapidly rising mortgage interest rates and a wait-and-see attitude. Buyers are trying to determine if mortgage financing costs have stabilized, what their future direction might be, and if home prices have reached the low point of their decline.
Unfortunately, it is too early to make this determination. As this Market Report was being prepared, the Bank of Canada again increased its benchmark rate. In February, it was 0.25 percent, an unprecedented increase of 1,600 percent in only nine months. So it's not surprising that buyers are on the sidelines, wondering where the residential real estate market is headed.
As painful as the latest increase in the Bank of Canada's benchmark rate, there may be some positive light in the Bank's most recent announcement. Raising the rate to 4.25 percent may indicate that further increases might end. In the past, all rate hikes were accompanied by announcements stating that further increases could be expected, and they were delivered. However, this time the Bank indicated that it would assess the inflation landscape in January and, depending on its findings, only then decide if further increases are necessary. If the Bank concludes that no further increases are necessary at its next meeting, that will signal that the real estate marketplace we have been experiencing is at an end. At that time, the resale market will begin to adjust to the new normal, resulting in greater buyer participation and increased sales.