TORONTO – The Toronto Regional Real Estate Board says competition between buyers started to re-emerge last month as the average home price in the area ticked above the average list price for the first time since May 2022.
The Ontario board found Wednesday that the average price of a home hit $1,108,606 last month compared with $1,096,519 the month before.
However, the average price was still down almost 15 per cent from $1,298,666 last March, when bidding wars kept the market moving at a frenzied pace.
Realtors and the board took last month’s numbers to mean the market is tightening after several months spent in a sluggish state, where sales paled in comparison to typical years and prices started to drop as interest and mortgage rates soared.
“For the month of March, we noticed more activity for listings, and with our buyers, we started to notice that our buyers are competing more and more with other buyers,” said Nasma Ali, the broker and founder of the One Group, part of Real Brokerage.
“Last year, there was no real competition. It was very dead. Last year, when you listed a house, you don’t even know if it would sell, but now it’s different.”
She sees TRREB’s numbers as proof that prospective homebuyers are regaining the confidence to wade into the market despite borrowing costs climbing as interest rates were hiked by the Bank of Canada eight times in less than a year.
“(Buyers) just don’t want to be in a situation where they’ve waited too long and things have now gone back to what they used to be, which was very scary for buyers because they were just competing with people with endless pockets,” Ali said.
She observed more homes nabbing multiple offers last month, but said potential buyers are being “much more conservative and cautious” and bidding under asking.
Their approach has left prices still far from their 2022 peak.
Detached homes had an average price of $1,468,651, down 13.5 per cent from a year ago, while semi-detached properties dropped more than 17 per cent to $1,087,924. Townhouses cost an average of $935,626, a 14 per cent decrease, while condos and apartments fell 13 per cent to $703,566.
TRREB found March’s composite benchmark price was $1,118,500, a 16.2 per cent drop on a year-over-year basis, but up month-over-month on both an actual and seasonally adjusted basis.
The month culminated with 6,896 sales, up from 4,765 in February. However, sales were still down almost 37 per cent from 10,862 in March 2020.
Priscilla Thiagamoorthy, a BMO Capital Markets senior economist, labelled the month’s home sales activity as “subdued.”
“There were signs that a bottoming process continued in March as market conditions tightened,” she wrote in a note to investors.
“With the Bank of Canada staying comfortably on hold, more buyers are now starting to enter the market.”
But sellers aren’t returning as quickly. Many held off on purchases because they want to fetch the lower prices their neighbours did at the peak last year.
Their cautious approach pushed new listings to 11,184 last month, down 44 per cent from the prior March.
TRREB’s numbers were released a day after TD Economics economist Rishi Sondhi sent a note to investors saying that “Canadian home sales appear to have reached a trough” after incurring a “dramatic slide” in prior months.
Sondhi is now forecasting quarterly sales gains with stronger growth headed into the year’s second half.
“Ontario and B.C. are poised to record the strongest quarterly sales growth this year,” Sondhi wrote.
‘This shouldn’t be taken as a sign of strength, however, as 2023 will likely be the softest sales year since the early 2000s in both provinces.“
On Tuesday, the Real Estate Board of Greater Vancouver revealed home sales fell 42.5 per cent in March from a year ago and were 28.4 per cent below the 10-year seasonal average.
Last month’s sales totalled 2,535 compared with 4,405 sales in March 2022 and 1,808 in February.
This report by The Canadian Press was first published April 5, 2023.
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