With Fall approaching, we need to look back at what happened in August. How is the real estate market trending as we head into a new season?
For the first time since February, the average home price actually increased. The overall sales numbers also indicated an upwards trend, so there could be some momentum building in the market. However, September can be a month where sales slow slightly because of the return to school. This means that October could end up being the busiest month of the season.
While those looking for a new home may have been hoping for another decline in price and sales so that they have more buying power, what I’d like to see is a balanced and more predictable market.
Given another recent rate hike, September will likely see more discussion about inflation, interest rates, and sales. Hopefully come October, home ownership can be the focus when discussing real estate.
GTA
In terms of August numbers, the month-over-month increase in the average house price was small, at 0.4% (or just under $5K), to $1,074,754. While it is an increase, the incremental rise could be a sign of what we can expect in the fall market.
On a year-over-year basis, the price increase sits at 0.9%, down from the 1.2% when comparing July of 2022 to July of 2021.
Looking at the sales portion of the TRREB numbers reveals a 14.6% increase in volume from July, with 5,627 sold. While this number is down by 34.2% from last August, it’s a smaller drop than the July year-over-year fall of 47.4%.
As is usually the case with the summer months and is possibly evidence of normalization, new listings were down by 12.5% from July to August. Moreover, as we transition out of summer, new listings should increase substantially.
Active listings also dropped, this time by 13.2%. But when compared to last year, the 13,305 active listings are up a massive 62%.
If you’re looking at the time that listings are spending on the market, August featured increases of five days to 34 from July; and 13 days from the 21 that it took in August of 2021.
Toronto
In the City of Toronto, home prices inched up slightly by 1.3% from July to 1,031,979. This is down 14.8% from February’s peak. Properties in Toronto’s east end, however, did not experience the upturn, falling 6.25% from July. In the west, prices were down 1.8% to $1,364,437 and 13.4% from the February 2022 high.
Looking to Central Toronto, the 6% increase from July is large in comparison to the other regions of Toronto. However, with detached homes making up most of the sales, the price is inflated due to their significantly higher average price than condos. This is still good news as it indicates that prices may be balancing out.
Looking at condos in the city, they’re still besting detached and semi-detached houses with only a moderate decline of 10.4% since February; the declines were 20.5% and 24.8% for detached and semi-detached houses in Toronto. I’m not surprised by this, as it appears to be the market levelling out after the considerable pandemic gains.
What this Means
While home prices have dropped precipitously since February, it must be considered a rare occurrence. August’s numbers seem to reflect the beginning of the market balancing, where neither the buyer or the seller has a significant upper hand. While we’re still far from stabilization, we can likely expect decreased prices to slow through the fall and into the winter. Less volatility can be expected as we roll into 2023, and September’s numbers should reveal even more.
What to do
If you’re in the market for a home, you’re in a good position, even after the recent interest rate hike. Prices are still down and with interest rates likely to go up, your costs will still be lower now than later this year. In addition, there are plenty of properties to choose from, and competition for those properties won’t be nearly as fierce as in past months.
Thinking about selling? Getting the price right at listing is crucial. You’ll want to sell your house quickly so you can get the most value for your home before interest rates rise and average prices potentially fall.
Are you a buyer or seller right now and unsure of what to do? I’m available to help you navigate this changing real estate landscape and make the best decision for you. In the meantime, make sure you’ve spoken with your mortgage advisor so that you know your financial position, and what you can and can’t do in this changing market.
Photo by Dillon Austin on Unsplash
