Toronto luxury real estate market conditions tightened in March 2023. Sales accounted for an increased share of listings in comparison to March 2022, suggesting that competition between buyers is on the rise. The average sale price was above the average list price for the first time since May 2022.
As we moved through the first quarter, competition between buyers was heating up in many Toronto luxury real estate neighbourhoods. The most recent statistics bear this out. Recent consumer polling also suggests that demand for ownership housing will continue to recover this year. Look for first-time buyers to lead this recovery, as high average rents move more closely in line with the cost of ownership.
The Toronto Real Estate Board reported 6,896 sales in March 2023 – down 36.5 % compared to March 2022. On a month-over-month basis, actual and seasonally adjusted sales were up. New listings were also down on a year-over-year basis, but by a much greater annual rate. This points to tighter market conditions compared to last year.
Lower inflation and greater uncertainty in financial markets has resulted in medium-term bond yields to trend lower. This has and will continue to result in lower fixed rate borrowing costs this year. Lower borrowing costs will help from an affordability perspective, especially as tighter market conditions exert upward pressure on selling prices in the second half of 2023.
The MLS® Home Price Index composite benchmark was down by 16.2% on a year-over-year basis, but up month-over-month on both an actual and seasonally adjusted basis. Similarly, the average selling price was down by 14.6% year-over-year to $1,108,606. The average selling price was up month-over-month on an actual and seasonally adjusted basis.
As population growth continues at a record pace on the back of immigration, first-time buying intentions will remain strong. Because the number of homes for sale is expected to remain low, it will also be important to have substantial rental supply available. Unfortunately, this is not something we have at the present time. We need to see a policy focus on bringing more purpose-built rental units on line over the next number of years.