May 2023 saw notable developments in the Toronto real estate market, indicating a positive trend. Sales rose for the third consecutive month, driven by lower home prices. The Toronto Regional Real Estate Board (TRREB) reported a total of 5,364 transactions in the region last month. This figure marks a 10% increase from April’s sales on a seasonally adjusted basis and a 14% rise from May 2022.
Market Dynamics in May
May 2023 recorded the highest number of transactions in the Toronto area since November of the previous year. However, this revival in sales occurred amidst a drop in new listings. The number of new properties available for sale fell by 2.1% from April and decreased by 16% compared to the same month last year.
Impact of Limited Listings
The decrease in available listings has intensified competition among buyers for properties in certain regions. Despite this heightened competition, home prices did not see a corresponding increase. TRREB’s home price index, which accounts for only typical transactions by excluding the highest priced sales, dropped 0.2% month-over-month, settling at $927,800.
Regional Price Changes
- In York, home prices decreased by 9.5% year-over-year.
- In Peel, the index fell by 7.6% during the same period.
- The City of Toronto’s home price index was 5.4% lower than a year ago.
Trends by Property Type
When examining property types, condominiums experienced a more significant price decline compared to houses and townhomes. In Peel, York, and Durham, typical condo prices dropped by over 10% in the year leading to May 2023. The market sees a surplus of high-rise condos impacting their resale values, as they remain cheaper than newly constructed units.
Long-Term Trends and Expectations
Over the past four years, home prices have been on a downward trajectory. Contributing factors include relatively high mortgage rates and a diminishing investor appetite for residential real estate. Presently, the typical home price in the Toronto region stands 32.6% lower than the peak reached during the pandemic real estate boom in spring 2022.
TRREB’s chief information officer, Jason Mercer, noted that while inventory levels have trended lower over the past year, buyers retain substantial negotiating power. He indicated that home prices could potentially rise later in 2023 if sales continue to increase relative to new listings.
