In 2023, the Greater Toronto Area (GTA) housing market unfolded as expected. There were similar numbers of sales and average selling prices in January 2022 as in December 2022. Year-over-year, both sales and prices declined, highlighting the impact of higher borrowing costs on affordability.
In recent months, home sales and selling prices have found some support. With the Bank of Canada’s announcement that interest rate hikes are likely to be on hold for the foreseeable future, some buyers will begin to move off the sidelines. A tight labour market and record population growth will continue to support housing demand.
According to TRREB’s MLS® System, GTA REALTORS® reported 3,100 sales in January 2023, up from 3,110 in December 2022, but down 44.6% from January 2022. As a result of the Bank of Canada raising interest rates beginning in January 2022, the January 2023 average selling price was slightly lower than the December 2022 average selling price and down by 16.4 percent from January 2022.
Over the past year, home prices have declined as homebuyers 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 begun to trend lower compared to last year. As we move through 2023, we expect this trend to continue, further improving affordability.
A variety of housing supply initiatives have been announced at all three levels of government in order to enhance housing affordability over the long term. Toronto City Council recently endorsed the Mayor’s Housing Action Plan 2023 as part of its $2 billion commitment to housing initiatives.
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