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You know the saying ‘In like a lion, out like a lamb’? According to the Farmer’s Almanac, if the weather at the beginning of March is bad (roaring, like a lion), then the weather at the end of March will be good (gentle like a lamb). Could the same be true for real estate? Here’s a recap of the important Toronto real estate news stories from March 2023:
Bank of Canada Interest Rate Announcement
For the first time in a year, the Bank of Canada decided to hold its overnight interest rate in March – there was no increase or decrease in the rate. That was welcome news after nine consecutive Bank of Canada interest rate increases brought the Toronto real estate market to its’ knees…and welcome relief for homeowners with variable-rate mortgages. It’s too soon to celebrate though – the BoC clearly communicated they are open to further interest rate increases this year if inflation doesn’t come down fast enough.
Inflation Was Better Than Expected
Speaking of inflation….the February inflation rate came in at 5.2% – a bit better than expected but still far from where the BoC wants to see it at 2%. Still, we’re headed in the right direction and have made great progress since June 2022’s inflation rate of 8.13%.
Global Banking Crisis News
March 2023 saw the collapse of the 16th largest bank in the US, Silicon Valley Bank, followed by Credit Suisse and a whole lot of nervousness in the banking sector. While our Canadian banking system isn’t at risk of default, we’re still impacted by the global banking crisis. When the bank collapses happened, government bond yields tanked, which led to lower fixed-rate mortgage rates in Canada – down by as much as 0.4%. Those lower rates aren’t likely around for a long time though, so if you’re thinking of buying, get pre-approved for a mortgage ASAP.
The February Real Estate Stats Were Bad, But Expected
We knew this day was coming – the year-over-year statistics comparing today’s real estate prices to the peak of the market in February 2022 – and it was just as ugly as we expected. Between February 2022 and February 2023, the volume of sales was down by a whopping 47%, with the average price in the GTA decreasing by 17.9%. But headlines can be deceiving! It’s important to remember that most of the market correction happened between March and June 2022 and the market has stabilized significantly since then. In fact, average prices in Toronto INCREASED by 5% between January and February 2023. Toronto’s Spring Real Estate Market Arrived
To REALTORS, the return of the spring real estate market is as exciting as seeing that first robin in the spring….we’ve made it through another long winter! We’re pleased to report that all signs point towards an active spring market. While inventory levels remain stubbornly low, we are seeing a return to bidding wars in some neighbourhoods and eager buyers who are tired of waiting for interest rates to come down. We wrote about the arrival of the spring market in depth here.
TRESA Isn’t Coming into Effect April 1 After All
We’ve been eagerly awaiting the Trust in Real Estate Services Act (TRESA), which was supposed to come into effect on April 1, 2023. TRESA is a long-overdue update to the rules, regulations and code of ethics that govern the real estate industry, and was supposed to include:
- Greater transparency with the offer process (including allowing open bidding auctions)
- Changes in how REALTORS represent buyers and sellers and the disclosures required
- Changes to the code of ethics and penalties
We were almost there! But the Ford government has agreed to consider a change to the new TRESA rules that would allow for ‘designated agency’ – which we support – and so we wait.
There was a lot of big real estate news in March 2023…What will April bring? Showers and May flowers?