In this email, I'll be breaking down the July stats provided by the Toronto Regional Real Estate Board (TRREB). They are specifically for the City of Toronto which includes Etobicoke, Central Toronto, North York, East York and Scarborough.
What happened in July?
Compared to July 2022, there was an increase in sales volume, average sale price, and new listings within the City of Toronto. On a more immediate comparison to the preceding month, a decline was evident across all three metrics.
Nonetheless, it's crucial to acknowledge that not only does the real estate market typically undergo a seasonal slowdown in the summer, the Bank of Canada raised it's overnight rate twice - once in June and once in July.
Moreover, when taking a year-over-year perspective, the current situation shows an improvement over the seasonal slowdown experienced in the previous summer.
"Home sales continued to be above last year’s levels in July, which suggests that many households have adjusted to higher borrowing costs. With that being said, it does appear that the sales momentum that we experienced earlier in the spring has stalled somewhat since the Bank of Canada restarted its rate tightening cycle in June. Compounding the impact of higher rates has been the persistent lack of listings for people to purchase compared to previous years,” said Toronto Regional Real Estate Board (TRREB) President Paul Baron.
Month-over-month, the average sale price experienced a decline, moving from $1.152 to $1.066.
Conversely, when we broaden our perspective to a year-over-year comparison, a contrasting trend emerges. The average sale price showcases a growth of 4.6%, indicating a positive trajectory in property values over the span of a year.
It's also noteworthy that this month marks the first notable year-over-year increase in the average sale price in the City of Toronto in 2023.
In July, there was a significant upswing of 16.5% in new property listings when compared to July 2022. However, there was a slight decline on a month-to-month basis.
This pattern suggests that sellers continue to engage actively in the market. Nevertheless, given the combination of subdued sales activity and a notable surge in new listings, a scenario emerges where supply surpasses demand. This dynamic tends to exert downward pressure on prices as buyers gain access to a wider array of choices and leverage to negotiate more favourable terms.
“Uncertainty surrounding the direction of borrowing costs, jobs and the overall economy has impacted home sales over the last two months. Over the long term, the demand for ownership housing will remain strong on the back of record population growth. However, many homebuyers will continue to be on the sidelines in the short term until the direction of monetary policy and the economy becomes clearer,” said TRREB Chief Market Analyst Jason Mercer.
Understanding key real estate market metrics: sales to new listing ratio, days on market, and months of inventory
The sales to new listing ratio tells us how many of the newly listed properties are being sold in a certain time frame. If the ratio is around 50%, it means the market is balanced. But if it goes above 60%, that's when we start to see a seller's market, where prices tend to rise. So, the higher the ratio, the better it is for sellers and the more competitive the market becomes for buyers.
The average days on market refers to the average amount of time that it takes for a property to be sold after it is listed for sale. This can be a useful metric for understanding how quickly homes are being snapped up in a particular area.
Lastly, the months of inventory ratio is a measure of the amount of time it would take for all of the currently listed properties to be sold, based on the current rate of sales. It's a useful metric for understanding how much supply there is relative to demand in a particular area. For example, if there are 100 properties currently listed for sale and 20 of them are sold each month, it would take 5 months to sell all of the properties (100 / 20 = 5).
July 2023:
July 2022:
Compared to the previous year, there has been a noticeable decline in the sales to new listing ratio, shifting from nearly 60% - indicative of a seller's market - to 49.7%, which now points to a more balanced market.
There was just a slight dip in the SNLR from 50.5% in June to 49.7% in July. And while this shift might seem subtle, it hints at potential responsiveness to short-term factors such as economic conditions, interest rate adjustments, or seasonal variations.
The recent actions of the Bank of Canada, involving successive 0.25-point increases in the overnight rate in both June and July, play a pivotal role in shaping the current market dynamics for both buyers and sellers.
If you have any questions or would like more information on recent home sales in your specific neighbourhood, don't hesitate to give me a shout at 416.856.1937 or by simply responding to this email.
