Toronto is sometimes referred to as Hogtown, but it is the other nickname ‘Big Smoke’ that reflects the way that Toronto is the equivalent of what New York City is to the United States. It’s the most populated city and likely will be for the foreseeable future. Bay Street will always be the primary hub for Canadian business, and there’s all sorts of other industries where people work and make their living and that necessitates them needing to live in the Greater Toronto area.
But that’s increasingly difficult to do for a lot of people, and as you might expect it is in Toronto and Vancouver where home prices have been overinflated for many years now. Now that May is done the industry is cleared to review and evaluate the Spring real estate market in Canada, and with the thaw seemingly in full swing and any degree of what many would call a market correction looking to be over it is also not surprising that prices have resumed climbing in Toronto.
Buyer enthusiasm will always be the primary impetus to seeing that happen, but in Toronto more than any other place in the country the way that there is so much more demand than supply is fueling what we’ve just seen as a market rally that will be good news for homeowners ready to put homes on the market.
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Let’s stay on track and look at how Toronto’s housing crunch is exacerbated by supply and demand inequalities more than elsewhere in the country.
25% Sales Increase From Spring ‘22
Positive indicators from the Toronto Regional Real Estate Board’s (TRREB) May data are very reflective of how demand for housing in Toronto is higher as expected in comparison to other cities and regions of the country. The average homes price has increased 3.7% since last month, but that still comes in at 1.2% lower than what was seen for this time last year.
But home sales in Toronto have increased 20% since last month and have now gone up nearly 25% since last year. New listings in the city increased 36% from April 2023, and May had 15,194 listings registered with the Toronto MLS. Further, the market has remained tight with listing supply down 18.7% from last year and what this continues to do is make the Toronto housing market one that is much more conducive to homeowner’s interests rather those of buyers.
And so it is that it will continue to be a seller’s market in much the same way it is for Vancouver and to a lesser extent Montreal. For Toronto it is common for listings to sell within 14 days, and that is some 20% sooner than last month but remaining at 16.7% slower in comparison to the even more overheated spring market of 2022.
The month-over-month increase in new listings comes as a welcome relief to the tight supply and demand imbalance but is still down 19% compared to May of last year. kept sellers in a price-setting position for most of the year to date. Grasping these and other supply logistics facts could offer insight into how the remainder of the year will go for Canadian real estate.
With Toronto and other major markets, the reality seems to be that if move-up buyers are the ones primarily driving supply shortcomings then the market could be providing a forecast of recovery. Oppositely though, if the market is being driven by sellers in any measure of financial distress and needing to offload investment assets then it may suggests that the market is in line to experience some headwinds against a recession this year.
Looking past Toronto to put the relevance of all this in a bigger-picture perspective, nationwide supply did pick up toward the end of May and so continued opportunistic selling could put an end to the spring market being a seller’s market, although we need to keep in mind that average price usually go down from May until August every year.
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