Lots has happened since March 2022: aggressive benchmark rate increases by the Bank of Canada: 8 to be exact, have cooled off the real estate market. Many home buyers, real estate investors and sellers sat on the sidelines for the majority of 2022 resulting in 75,082 sales in the Greater Toronto Area, the lowest sales figures since 2010 (per TRREB.ca).

On January 25, the Bank of Canada uttered "Governing Council expects to hold the policy rate at its current level". Ever since then the real estate market shifted. Buyers have come back and multiple offers are taking place on quality well priced houses.

The number of showings is a leading indicator. Actually the number of pre-approvals and potential buyers reaching out to their mortgage brokers or banks is the first step in the real estate cycle but there isn't data on that so I will stick to the number of showings "appointments" booked to view properties.

The cycle starts with showings, followed by offers, then sales which aren't reported till the following month (lagging indicator). The two charts, above and below, clearly show we are past the bottom of the market.

The question is will prices rebound. There are two headwinds holding average prices down:

1. Mortgage Rates: Higher cost of borrowing. After all, homeowners buy based on monthly payment and not necessarily the purchase price. Every homeowner's question: Am I ok paying $X per month? With the recent banks collapse bond yields dropped pushing fixed mortgage rates lower. Crisis presents opportunities and in this case fixed mortgage holders can benefit from lower fixed rates!!

2. Equity Market: This impacts higher priced homes, luxury properties, etc...sales in these categories would bring the average price up. Cashing out a portion of one's portfolio at a loss to buy a home is a want and not a necessity. Potential homeowners in this category will hold back till there is a good bounce back in their portfolios valuation.

Finally, the above market numbers are on a macro level, real estate is local. Sales of condos in Distillery District is a different market from house sales in High Park.

For more information about your local pocket, reach out.

Till next time......