The average selling price of a home in the Greater Toronto Area is expected to hit a new record in 2022, according to the latest insights from the Toronto Regional Real Estate Board (TRREB).
In a news release issued today, TRREB summarized its predictions for what we could see from the GTA housing market this year, along with the sales and pricing numbers for January 2022.
Here’s what we know from the latest TRREB insights.
Sales to reach 110,000 as average selling prices top $1.2 million in 2022
This year, TRREB predicts that home sales reported through the MLS system will total 110,000. This is a dip from 2021, but still “a strong result,” compared to previous years, TRREB said. Meanwhile, the average selling price of a home will climb to $1,225,000, up 12 per cent when compared to last year.
Labour market conditions and population growth will have a notable influence on the GTA market this year. Kevin Crigger, president of TRREB, explained that immigration into Canada and the GTA is expected to be at or near record levels in 2022, a population that will need housing. On top of this, job creation in average to above-average income industries is anticipated to remain strong, boosting confidence to make larger purchases.
“Unfortunately, the supply of listings will remain constrained, sustaining strong competition between buyers and double-digit growth in selling prices,” said Crigger.
Multiple interest rate hikes expected in 2022 by the Bank of Canada is another factor at play. Although the BoC’s tightening cycles have “historically led to fewer transactions,” TRREB notes that home buyers have recently been held to a much higher qualification standard under the stress test, which could “mitigate the impact of higher contract mortgage rates moving forward.”
Jason Mercer, TRREB’s chief market analyst, explained that there will also be a number of issues that will set transactions off from last year’s record.
“First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold. Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller,” explained Mercer.
“Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can’t buy what’s not available for sale,” he added.
First-time buyers likely to drop, detached homes to remain popular
Polling conducted by Ipsos revealed that consumer sentiments around GTA housing are evolving.
For one, buying intentions for 2022 have decreased relative to previous years, but those who indicated that they are “very likely” to buy this year have remained in line with the last number of years.
“The bottom line is that those who are fully committed to a home purchase will do so in 2022, whereas some of those on the fence may put their decision on hold,” said the report.
For future buyers, detached homes continue to be the most popular, particularly in suburban areas. In the City of Toronto, more prospective buyers said that they will be focused on condo apartments and higher density, low-rise home types this year.
However, the percentage of first-time buyers is expected to decline thanks to “lower intentions” in the suburban 905 regions surrounding Toronto. On the other hand, a resurgence in condo apartment demand from 2021 could attract first-time buyer activity to the 416 area.
The portion of existing homeowners who are “very likely” to put their home on the market this year will be lower in both the City of Toronto and the outer regions, according to TRREB.
“Given sales above the demographic norm over the past year, it makes sense that listing intentions are down,” said the report. “In addition, there still exists a vicious circle where homeowners will decide not to list because they fear they will not be able to find another home that meets their needs.”
Sales and new listings take a hit in January
Starting off 2022, sales and new listings were down last month, but prices continued to rise.
Through MLS, 5,636 sales were reported in January, down 18.2 per cent compared to the same month a year ago when 6,888 homes were sold. The majority of sales were logged in the 905 region, with 3,389 properties exchanged. Sales for condo apartments in the 905 area dropped the most, falling 20.9 per cent annually to 607 sales in January. Although last month’s sales were down annually, it was still the second-best in history for the month.
New listings fell by 15.5 per cent year-over-year, dropping from 9,438 in 2021 to 7,979. At the end of January, active listings totalled 4,140 homes, down 44 per cent to the lowest level in more than two decades.
Tighter market conditions pushed the average selling price to $1,242,793 in January, up 28.6 per cent yearly. The MLS Home Price Index Composite benchmark also rose 33.3 per cent annually. The average price of a semi-detached dwelling in the 905 region grew the most in January, rising 37.3 per cent year-over-year to $1,236,081.
“It is clear that 2022 is starting off the way 2021 ended in terms of the relationship between demand and supply in the GTA housing market,” said TRREB CEO John DiMichele, who also noted that it will be important for voters to understand real estate policies being campaigned on this year as part of the provincial and local elections.
