Home sales in the Greater Toronto Area is off to a weak start, according to January statistics published by the Toronto Regional Real Estate Board (TRREB) on Friday.
January saw a grand total of 3,100 home sales across the GTA, which was just a sliver less than the 3,110 sold in December. Although the winter months are typically slower, this represents a 44.6% decrease when compared to the 5,594 homes sold in January 2022.
The gap can be attributed in large part to declining sales within the City of Toronto, which totaled 2,235 in January 2022, but just 1,108 in January 2023 -- a 50.4% decrease. Meanwhile, sales outside of the city fell 40.7%, from 3,359 to 1,992.
New listings, however, remained steady. January saw 7,668 new listings in the region -- a small 3.7% decrease compared to the 7,983 listed in January 2022. The decrease, TRREB data reveals, was fairly even between the City of Toronto and the rest of the GTA.
The Market Lean
What does all of this mean? Where is the market headed?
With the aforementioned statistics, we can determine the sales-to-new-listings ratio, which serves as a quantitative indicator of whether the market is leaning towards buyers or sellers (or neither). A ratio below 40% is usually considered a buyers' market, while a ratio above 55% is viewed as favoring sellers, and anything in between a sign of market balance.
With 3,100 home sales and 7,668 new listings recorded in January, the sales-to-new-listings ratio is 40.4%, indicating a buyers' market. This is a noticeable shift from December where there were 3,110 home sales and 4,074 new listings were registered, resulting in a ratio of 76.3%.
A second quantitative indicator is the sales-to-active-listings ratio, where a ratio below 12% is considered a lean towards buyers, above 20% a lean towards sellers, and anything in between indicating balance.
With 3,100 home sales and 9,299 active listings as of January, the sales-to-active-listings ratio is 33.3%. However, December saw 3,110 home sales and 8,692 active listings, for a ratio of 35.8%, indicating that the market is moving in the direction of buyers.
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Prices Have Found Support in Recent Months
The average selling price in January was $1,038,668 -- down 16% compared to January 2022 but not significantly changed from the $1,051,216 average seen in December.
"Home sales and selling prices appear to have found some support in recent months," said TRREB President Paul Baron. "This coupled with the Bank of Canada announcement that interest rate hikes are likely on hold for the foreseeable future will prompt some buyers to move off the sidelines in the coming months."
"Home prices declined over the past year as homebuyers sought to mitigate the impact of substantially
higher borrowing costs," added TRREB Chief Market Analyst Jason Mercer. "While short-term borrowing costs increased again in January, negotiated medium-term mortgage rates, like the five-year fixed rate, have actually started to trend lower compared to the end of last year."
A tight labour market and strong population growth are expected to keep demand for housing strong, and TRREB points to policies like Mayor John Tory's 2023 Housing Action Plan that are striving to increase supply, which could subsequently, and hopefully, bring improved affordability.
