TORONTO — The Toronto Regional Real Estate Board expects the average price of a home to edge upwards as 2023 progresses but end on a lower note than last year as buyers get off the market's sidelines and make long-awaited purchases again.
The Ontario board said in its annual outlook released Friday that it foresees the average selling price this year reaching $1,140,000, up from $1,038,668 in January.
The predicted average selling price amounts to a four per cent drop from the 2022 figure of $1,189,912, but exceeds pre-pandemic levels. The predicted price is 39 per cent higher than 2019's average of $819,153.
“It will be a year of two halves in 2023. The first half will feel similar to the fall of 2022 due to the lingering effects of higher borrowing costs and related economic uncertainty," said Jason Mercer, TRREB's chief market analyst, in a news release.
"The second half of 2023 should be characterized by an increase in demand for ownership housing, supported by lower fixed mortgage rates, a relatively resilient labour market and record immigration."
The board's forecast is partially based on Ipsos polling suggesting more buyers are likely to wade into the market in the coming months, but also factors in potential buyers, who have been nervously watching interest and mortgage rates tick upwards for much of the last year.
The quick succession of rate hikes has left many buyers putting off purchases and sellers wary of listing their homes when the heated bidding wars of early 2022 have dissipated.
But in recent months, Bank of Canada governor Tiff Macklem has signalled that he is backing away from further hikes and will only return to the pattern if inflation doesn't budge down to the central bank's target of two per cent.
Realtors say the signals and housing market conditions in recent months have left buyers torn between whether they should make a purchase because prices have declined or wait even longer in case they haven't reached their bottom yet.
TRREB calculated the home price index to be $1,078,900 last month, a slight drop from $1,081,400 in December.
The decrease followed several months of steady declines, which saw prices fall nearly 20 per cent from their spring peak and 16.4 per cent from a year ago.
TRREB believes the price drops will be enough to get many buyers into the market again, but predicts buying intentions will lag prior years.
Its outlook suggests the market will see 70,000 sales this year, down from 75,107 last year and 87,747 in 2019.
However, TRREB cautioned buying intentions won't be even throughout every housing class.
The number of people Ipsos found as likely to list their townhome, condo or semi-detached property in 2023 is up compared with 2022, but listing intentions for detached homes appear to be trending lower.
This report by The Canadian Press was first published Feb. 10, 2022.
Tara Deschamps, The Canadian Press
