As we moved from 2022 into 2023, the Toronto luxury housing market unfolded as expected. The number of January sales and the overall average selling price were similar to December 2022. On a year-over-year basis, both sales and prices were down markedly, continuing to highlight the impact of higher borrowing costs on affordability over the last year.
Toronto luxury home sales and selling prices appear to have found some support in recent months. This coupled with the Bank of Canada announcement that interest rate hikes are likely on hold for the foreseeable future will prompt some buyers to move off the sidelines in the coming months. Record population growth and tight labour market conditions will continue to support housing demand moving forward.
The Toronto Real Estate Board reported 3,100 sales in January 2023 – in line with the December 2022 result of 3,110, but down 44.6% from January 2022. The average selling price for January 2023 at $1,038,668 was slightly lower than the December 2022 result and down by 16.4% compared to the January 2022 average price reported before the onset of Bank of Canada interest rate hikes. The MLS® Home Price Index (HPI) Composite Benchmark was in line with the December result, but down by 14.2% compared to January 2022.
Toronto luxury home prices declined over the past year as buyers sought to mitigate the impact of substantially higher borrowing costs. While short-term borrowing costs increased again in January, negotiated medium-term mortgage rates, like the five-year fixed rate, have actually started to trend lower compared to the end of last year. The expectation is that this trend will continue, further helping with affordability as we move through 2023.
“Toronto’s Luxury Real Estate Authority”