MARKET STATISTICS | OCTOBER 2023
Sunday Nov 12th, 2023
Average Prices of Detached Homes in October in Comparison to October of 2022:
• Toronto: +6.40% at $1,70M
• Vaughan: -0.34%at $1,72M
• Richmond Hill: -3.12% at $1,85M
• Mississauga: +13.15% at $1,56M
• Markham: -2.06% at $1,72M
• King City: +2.83% at $2,73M
• Newmarket: +3.87% at $1,28M
• Aurora: +7.76% at $1,71M
• Bradford: +7.93% at $1,18M
• Milton: +1.95% at $1,28M
• Stoufville: +10.69% at $1,50M
• Innisfil: +19.82% at $1,07M
• Alliston: +0.92% at $899,000
• Burlington: +1.74% at $1,45M
• East Gwillimbury: -6.37% at $1,25M
• Barrie: -0.04% at $818,000
Higher Borrowing Costs See Buyers Remain on Hold
Toronto’s October was the quietest in nearly 25 years. Higher interest rates continue to slow down the market. We are seeing a slow decline in sales activity, but it's minimal and not unexpected for this time of year. A quieter real estate market in October is not uncommon, as it often marks the beginning of a seasonal slowdown. Many buyers and sellers prefer to make property transactions during the spring and summer months when the weather is more favorable, and there is a perception that the market is more active. Therefore, a slowdown in October is not necessarily unexpected.
So, sales are down and number of active listings is up all across the GTA. However, selling prices remained higher than last year’s levels. It's worth noting that a minimal decline in sales activity may indicate that the market is still relatively stable, even in the face of higher interest rates. Although some might assume that higher inventory alone can solve supply and demand imbalances, this assumption might no be accurate and is an oversimplification. The dynamics of supply and demand in real estate are influenced by various factors, and simply increasing the supply of housing does not always lead to a balanced market. Here are some reasons why:
1. When one sells a property, it doesn't always add a unit of supply onto the market because that seller needs to live somewhere else, which also removes a unit of supply from the market. Additionally, there are many people who don't want to sell their properties because they would lose their locked-in low interest rate and would not want to trade it in for today's 6% or 7% rate.
2. Market Factors: The real estate market is affected by a range of factors beyond just the number of available properties, such as interest rates, economic conditions, demographics, and consumer confidence. These factors can have a significant impact on demand, regardless of supply levels.
3. Location and Quality: The location and quality of properties also play a crucial role in the supply and demand equation. A surplus of properties in one area may not address the demand for housing in another, especially if the locations are vastly different in terms of desirability and amenities.
4. Affordability: Affordability is a critical factor in the real estate market. Even with more inventory, if properties are not affordable for potential buyers, it will not necessarily lead to increased demand.
5. Regulatory and Zoning Constraints: Local regulations and zoning restrictions can limit the ability to increase housing supply in certain areas. These constraints can make it challenging to meet demand through increased inventory.
6. Speculative Investment: Real estate can be influenced by speculative investment, where investors buy properties not for personal use but for the potential of future profit. This can distort market dynamics and may lead to imbalances.
7. Demographic Changes: Changes in demographics, such as population growth, urbanization, and generational shifts, can also impact the demand for real estate, regardless of supply levels.
8. Financing and Mortgage Availability: Access to financing and mortgage availability can affect the demand side of the equation. If financing becomes more difficult to obtain, it can reduce demand even if there is an ample supply of properties. This is what we are seeing now.
To address supply and demand imbalances, it often requires a comprehensive approach that considers not only increasing supply but also addressing other factors that influence demand and affordability. This might involve policy changes, infrastructure development, and efforts to promote sustainable and balanced growth in the real estate sector.
What we see today, is buyers are poised to maintain their strong bargaining position while their budget remains heavily constrained by high interest rates and extremely poor affordability conditions. Most of those buyers, who manage to get qualified for mortgage, adopted a more cautious and defensive approach. They are more likely to take their time, thoroughly research their options, and carefully consider their choices before making a purchase.
In this type of market, sellers may find it necessary to adjust their pricing and be more flexible in negotiations to attract buyers. As interest rates and affordability constraints are significant factors in buyer behavior, sellers may need to be realistic about their pricing expectations.
Toronto has historically been a resilient and robust real estate market. While factors like higher interest rates can slow down activity, the long-term fundamentals of the city, such as population growth and job opportunities, can continue to drive demand for housing.
It is important to note that real estate markets can vary significantly by location, and the dynamics may not apply uniformly everywhere. Additionally, market conditions change fast, so staying informed and adaptable is key for both buyers and sellers in any real estate market. Working with an expert real estate agent is extremely valuable in navigating today’s complex market. When thinking of buying or selling, give me a call. I can provide insights, negotiate on your behalf and help streamline the home-buying and selling process.
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