Charting the Ups and Downs of Toronto’s Market
After a runaway surge in housing prices during the first two years of the COVID-19 pandemic, the Toronto real estate market took a dive in 2022, as interest rates rose alongside the cost of living. Consecutive rate hikes by the Bank of Canada pushed would-be homebuyers to sit on the sidelines since mortgage borrowing was much more pricier. Sellers also took a step back in the hopes that a rebound would materialize. This resulted in significantly lower housing inventory, which helped stymie the home price free-fall by mid-late summer.
To get a clearer picture of where home prices stand in relation to the highs experienced during the ‘pandemic years,’ I’ve charted 2020-2022 and the first three months of 2023.
When looking at the average price for all home types in Toronto proper, it took two interest rate hikes (March and April 2022) to have a widespread impact. This is likely due to the fact that buyers had locked-in mortgage rates, so the initial rate hikes would not have impacted them, as well as that home closings were from previous months’ purchases, affecting price data for these months.
Prices stabilized after bottoming out in July 2022, and then increased slightly during the fall market before ending the year on a typical lower note. At the end of December, the average home price was basically on par with that of December 2021, down only $5,040 or just 0.5%. When compared to 2020, the average home price was higher throughout all of 2022, illustrating properties still gained value over a two-period.
As is generally the case following the winter holidays, the average home price was marginally lower at the start of 2023, than at the end of 2022. Since then, it has increased, even with the slight dip in March. This shows promise for prices, especially given the shortage of properties for sale. The spring market (April-June) will provide a good indication of where prices are headed for the remainder of the year, barring any significant increases in interest rates.
In 2022, detached home prices fell a whopping 21% over a two-month span. By July, prices had dipped slightly below the 2020 high of $1,022,138, before rebounding and staying the course of stability.
From January to February of this year, prices jumped 15.2%. Data from March indicates this significant price increase is not an anomaly, and there’s a distinct possibility that the detached home market will see prices reach (and may even exceed at some points) 2021 levels in 2023.
Unlike the detached home market, the decline in semi-detached home prices was steady in 2022, occurring over the course of five months. Despite the slight bump in prices in fall, the market ended the year just slightly above the low point in August, and below December 2020. On a year-over-year basis, the price of semi-detached homes fell dramatically to $1,152,073 in December 2022, from the record-breaking high of $1,698,178 in December 2021 — a whopping 32% drop in prices.
2023 looks promising for semi-detached homes, with prices up 9.6% in three months. However, this market segment is unlikely to reach the price highs of 2021 this year.
Much like semi-detached homes, townhouses saw a steady decline in prices, beginning in March 2022. Any price gains achieved in fall to bring this market segment closer to 2021 highs dissipated by the end of the year, with townhouse prices down nearly 12% by the end of 2022.
Prices have increased since then and show signs of stability in 2023, but still well below 2022 price levels at this point. However, if the current trend continues, prices will likely remain above those in 2021, at least for the majority of the year.
Unlike any other market segment, condominium apartments ended 2022 on a higher note than 2021, with the average price up 1.5%. In fact, 2022 prices remained above those of 2021 for much of the year despite the marked decline from the high in March ($831,351) to the low in August ($736,940) — a 11.4% drop.
Also contrary to its lowrise counterparts, the average price of a condo unit in 2023 has not yet surpassed its December 2022 price point, albeit it’s not far off (-1.2%). While prices are on an upward trajectory, month-over-month increases are presently minimal, averaging around 1%. While the outlook for 2023 is good for condominium apartments, with prices remaining above 2021 levels, the market rebound may be a slower one than other market segments and is unlikely to reach the highs of 2022 any time soon.