The average home prices in Toronto increased by as high as 28% for February compared the previous year. On the positive side, there is an improvement in new listings which is just 6.6% down year-over-year compared to last month's --15.5%. It's notable that home sales also dipped by 16.8%. With home sales less than new listings, it may be just the sign that we need to see a more balanced market. Although it will take some time for home prices to go down unless new listings continue its good progress in the market

One of the highlights for February is that the Bank of Canada raised the benchmark interest rate to 0.50 from the previous 0.25, and will likely to increase some more in the coming months. This is the first increase since 2018 and is possibly the first of the five more instances of increase before the year ends. The increase in interest rates is inevitable as the economy further stabilizes and inflation continues to advance. The higher borrowing cost will impact the market specifically in lowering demand and managing the inflation. In fact, the interest rates for fixed-rate mortgages are steadily increasing in the last few months. We can expect lenders to increase their interest rates some more as a response to what the central bank has first initiated.

As mentioned, home prices are now at nearly 28% up compared the previous year. The average home price topped the $1.3 million mark, making Toronto homes the most expensive in the country. This is the second busiest February on record, with home sales increasing by almost 6% compared the previous month. However, we can expect a more moderate price growth in the next few months with increased interest rates in place making borrowing costs higher and limiting purchasing power from buyers.

Although new listings are still down year-over-year, there were note-worthy increases in new listings across major house markets compared to the previous month. This is a good indication of the market slowly getting back to normal, with more sellers coming into the market again. It's up to the sellers now on how this year's spring season market will turn out, whether they would see the higher interest rates as a good opportunity to list their property or not. Unless new listings continue to improve, increase in home prices will likely persist.

Let us take a look at the numbers presented by TRREB in their latest February 2022 statistical update for GTA.

Source: TRREB March 2, 2022

Year-over-year Total Residential Transactions

February 2021 - 10,929

February 2022 - 9,097

There was a decrease of 16.8% in sales compared to last year. However, for February 2022 sales result over January 2022, sales increased by 5.9%.

January 2022 - 9,883

February 2022- 10,469

There was an increase of 5.9% in sales compared the previous month.

The number of home sales in February 2022 decreased by 16.8% on a year-over-year basis, but increased by of 5.9% from last month.

The average selling price of homes set an all-time high.

February 2021 - $ 1,044,957

February 2022 - $ 1,334,544

There was a 27.7% increase in selling price compared to last year.

For the average selling price compared to the previous month, there was an increase of 1.3% for the home prices.

January 2022 - $ 1,288,513

February 2022 - $ 1,304,816

There was an increase of 1.3% in selling price compared the previous month.

Total New Listings added to the Market

February 2021 - 15,146

February 2022 - 14,147

There was a decrease of 6.6% in new listings in a year-over-year basis.

The February 2022 % Sales-to-New Listings Ratio of 64% decreased by 8% compared to 72% of February last year.

Year-over-year Total Condo Apartment Sales

Q4/20 - 6,462

Q4/21- 7,815

There was an increase of 20.9% in condo sales compared the previous year. There was also an increase in the average selling price for condos.

Q4/20 - $ 610,042

Q4/21- $ 710,087

There was an increase of 16.4% in average selling price compared the previous year.

Here is the summary of the listings of condominiums

Year-over-year Total New Listings

Q4/20 - 12,305

Q4/21- 8,758

There was a huge drop of 28.8% in new listings compared the previous year.

From February 11 to March 11, there were a total of 664 sales in townhouses, lower by 18% compared to previous year. There were 674 new listings, also down by 8%. For the average selling price, a 1 Bd Townhouse can cost $833,000 which is 23% higher compared to the same month of last year. While a 2 Bd Townhouse costs $1,1M, also an increase of 23% compared to the previous year.

Home affordability is now at stake when the bank of Canada increased interest rates to curb demand and manage the inflation. However, the coming months also look promising in terms of new listings with now more sellers coming into the market. If this situation continues along with less demand from buyers, we might just achieve the more stabilized housing market that we are all hoping for, resulting to the slowing down of price increase in properties.

If you have any question about Toronto housing market or need help buying or selling your home, you can contact me at 647-834-9928 or send an email to sukhinvasara@gmail.com