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With the Toronto real estate market in a state of decline for a full 6 months now, the August 2022 statistics bring some hope, albeit in a world of continued uncertainty.
5 Things to Know About The August Statistics:
- Homes are taking longer to sell.
- Condos are outperforming houses.
- Prices and sales volume are down – but the pace of decline is slowing.
- We might be in the Sweet Spot for Buyers.
- For homes that aren’t selling: bigger, faster, and bolder price reductions are key to maximizing price.
The August 2022 Stats
Let’s start with the basics across the Greater Toronto Area:
- Sales volume was down 34.2% vs. August 2021. While this wouldn’t normally be something to celebrate, it’s a vast improvement over the 47% drop we saw in July 2022 and the 41% drop in June 2022.
- The average price of a home across the GTA in August was $1,079,500 – up by 0.9% vs last year and up $5,000 vs July 2022. That small increase isn’t statistically significant – but it’s a lot better than the average $71,500 drop we saw between June and July 2021.
- The number of active listings was down from July, but up over 62% since last year. There are still lots of homes for sale.
- Homes are continuing to take longer to sell, taking on average, 34 days in August 2022. That’s up from July’s average of 29 days and up significantly from August 2021’s 21 days.
Now let’s dig deeper into the August 2022 real estate statistics for the City of Toronto:
The average price of a home in Toronto is up slightly over July, but still down 14.8% vs the peak of February 2022.
- In Toronto’s east end, the average price was $956,004, down 6.25% since July and down almost 22% since February’s peak. If your east-end home was listed for sale in August, it lost almost $20,000 of value per week.
- In the west end, prices were down to $1,364,437, down 1.8% vs July, and 13.4% lower than February’s peak.
Last month, we started sharing absorption rates, a measure of supply and demand, calculated by taking the number of homes sold in a month and dividing it by the number on the market. Higher absorption rates indicate more of a seller’s market; lower absorption rates indicate more of a buyer’s market. In July 2021, the absorption rate for Toronto was 69%; in July 2022, that number had fallen to 41%; in August 2022, that number had slightly increased to 42.3%. It’s going in the right direction.
What the Heck Happened in Central Toronto?
At first glance, it looks like central Toronto had a killer month. Average prices in August 2022 were technically up almost 6% vs July 2022….BUT…and this is important…much of that increase is due to differences in the mix of sales. In August, detached home sales (which have a much higher average price than condos) made up a greater percentage of the total sales than in July. There were also more luxury sales over $4 million in August (13 sales) than in July (6 sales).
So don’t get excited when you see the 23.8% increase in the price of detached houses in central Toronto – that’s just statistics being weird. As the sample size gets smaller, statistics are more impacted by anomalies.
It’s still good news for central Toronto and we’ve definitely taken a step in a better direction- but it would be a mistake to assume that the market shift has ended.
Condos Are Outperforming Houses
In Toronto, the average price of a condo declined 10.4% since February. Compare that to the average detached and semi-detached home prices, down 20.5% and 24.8% respectively. This isn’t a surprise – the market continues to erase the outsized gains made during the pandemic – the bigger the price increase during COVID, the bigger the price decrease post-COVID.
The decline in home prices and sales volume in Toronto since February 2022 was shockingly fast and severe, and every homeowner (and realtor) is looking forward to the real estate market balancing out. After years of accelerated price growth and what felt like a free fall these past 6 months, the August statistics are our first sign of hope that we might soon see a balanced market, where buyers and sellers share power and control. That doesn’t mean a return to February 2022 prices anytime soon – but it might mean the pace of price decreases will slow over the next few months and we’ll experience less volatility.
But of course…the Bank of Canada is expected to increase interest rates again next week and while anticipated, it will further reduce buyers’ purchasing power and put pressure on homeowners with mortgages. We aren’t out of the woods yet – what happens in September will be very important in gauging the future health of Toronto’s real estate market.
Our Best Advice
- Potential Buyers: If there’s even a 1% chance that you might buy a home or investment property in 2022, get pre-approved for a mortgage NOW, before the next interest rate hike takes effect. The next Bank of Canada rate announcement is scheduled for Wednesday, September 7th.
- Active Buyers: We might be in the Sweet Spot of the market– prices are down from historical highs, interest rates are lower than they are expected to be in the coming months, there’s a decent amount of inventory to choose from, and you won’t likely find yourself in a crazy bidding war. Even if prices decline further, any savings will quickly be negated by higher interest rates and carrying costs.
- Buyers on Pause: If you’ve paused your search waiting for things to settle, now might be a good time to start again, before everybody else decides we’re in the Sweet Spot too (just make sure you still have a valid pre-approval and locked-in interest rate).
- Current Sellers: If your home is currently listed for sale, you NEED to be priced right. It’s not time to price high and hope – time is not your friend in this market. For example: If a house was listed for sale in East Toronto on August 1 and was overpriced by $50,000, it is now overpriced by $130,000. A $50K price reduction on August 2 would have netted the Seller a lot more money than what they’ll be able to sell it for today. Bigger, faster, bolder price reductions are key to getting your home sold if it’s languishing on the market.
- Future Sellers: If you’re planning on selling your home this fall, make sure to engage an agent ASAP – the more guidance and advice you have from the start, the better.