A for sale sign hangs in front of a home in Toronto's Leaside neighbourhood, on May 16, 2023.Ammar Bowaihl/The Globe and Mail
Toronto home sales soared for the second straight month, as buyers continued to enter the market after last year’s slump in activity.
There were 6,448 resale transactions in January, a 9.6-per-cent increase over December after removing seasonal influences, according to the Toronto Regional Real Estate Board (TRREB). That follows the 19.5-per-cent rise in November.
However, the resale volume was below the 10-year average and home prices continued to fall. The home price index, which excludes the highest priced transactions, fell 1.2 per cent to $1,078,500 on a seasonally adjusted basis for the sixth straight month of declines. The index is just below the January, 2023, level of $1,079,100.
Now that the Bank of Canada has softened its message on further interest-rate hikes, buyers may have more assurances that borrowing costs will start to fall and that could encourage them to begin pulling the trigger on transactions.
“A lot of would-be homebuyers are waiting for the Bank of Canada to make an actual cut,” said TRREB’s chief market analyst, Jason Mercer. If the central bank starts to lower its benchmark interest rate from the current 5 per cent, Mr. Mercer said confidence in making a purchase will improve and that translates into higher sales.
Since June, the real estate market has been in a slump. Over the summer, the central bank had surprised buyers with back-to-back interest-rate hikes, in part to cool the brief frenzy in the real estate market. The unexpected rate hikes spooked prospective homebuyers who did not want to make a purchase for fear that the central bank would continue to raise rates.
Although the slowdown contributed to price drops, it remains difficult for prospective buyers to qualify for a large enough mortgage to buy a property in the Toronto region.
Last month, the home price index in the city of Toronto was $1,050,300 and prices were higher in the city’s wealthy, suburban areas. In the Halton Region, to the west of the city, the index was $1,097,800. And in the York Region, to the north of the city, the index was $1,300,900.
More homeowners put their properties up for sale. The number of new listings rose by 4.6 per cent from December to January, the first monthly increase since September.
Although the federal government extended its foreign buyer ban on residential real estate to 2027 from 2025, Mr. Mercer said that it would have a “marginal impact.”
He predicted that competition will pick up again this year. “The end result will be upward pressure on selling prices over the next two years,” he said in a news release.