June 2023 Market Report – Don’t Overthink the Small Decline
After months of steady gains in the average home price in the GTA, June experienced a dip.
Does that mean that the GTA real estate market is now in trouble?
In short, no.
With a decline of 1.2% from May to June, the natural reaction would be to say that we should be worried. But when we compare the same months in 2021 and 2022, the declines were more significant: 3.3% and 6.6% respectively. So, a decline of 1.2% from month to month is actually a sign of strength in the real estate market in this instance.
As mentioned, the average home price fell from May to June by 1.2%, from $1,196,101 to $1,182,120. But when compared to June 2022, the price has increased by 3.2% from $1,145,796. June 2023 also marks the first time that the average monthly price was higher than in 2022.
Total housing transactions in June also fell from the previous month (9,012 to 7,481). This is the first time that has happened in 2023. But this is true to trends as June is usually a slower month for sales than May. In terms of year-over-year comparisons, June’s 7,481 sales easily exceeded the 6,422 sales of June 2022. That’s 16.5% growth.
New listings were also up by 4.4%, as inventory continues to slowly rise. The 15,865 new listings were lower than the 16,353 in June of 2022, but when we look at active listings, we see a substantial 18.9% increase from May (11,868) with 14,107 homes on the market.
The City of Toronto also experienced a drop in average price in June. The average price in the 416 fell to $1,152,424 from $1,197,021 in May.
The 416 continued to follow the path of the GTA in June, with new listings also growing modestly, from 5,734 in May to 5,789 in June; active listings increased to 5,521 from May’s 4,949.
The Sales-to-New-Listings Ratio (SNLR) was also up again across both the GTA and the City of Toronto. The GTA’s SNLR moved up to 52.5% from 51.5%; the 416’s SNLR moved to 50.5% from 49.4%.
In the near-term, housing prices in the GTA should continue to rise at a steady rate. Buyers will need to look at their expectations in the long term as interest rates are expected to start falling late this year. In fact, three of Canada’s big banks have worked a fall to 3.50% into their forecasts by the time 2024 comes to a close.
So, while prices dipped slightly from May to June, the overall real estate trend in the GTA remains strong. I expect July to outperform June for average price as the summer months heat up.
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Photo by Glen Carrie on Unsplash