GTA Housing Market Overview (FEB 2023)
The Greater Toronto Area (GTA) saw a 5.5% monthly jump, with the average GTA home price in February 2023 reaching $1,095,617. This means that the GTA housing market has seen an 18% decrease in prices year-over-year, a significant dip for homeowners as they weather through high mortgage rates and an increasing cost of living.
There were 4,783 home sales in the Toronto housing market during February 2023, a 47% decrease from the 9,097 sales in February 2022. Yet it is 54% higher than 3,100 sales during January 2023. The main reason for this annual decline in market activity is that in 2022, prime rates soared from 2.45% to 6.45%, signifying the increased cost of borrowing for potential homebuyers.
The composite benchmark home price, which measures the price of an “average” home, registered its first increase since last spring’s price peak. The GTA’s benchmark home price for February 2023 was $1,091,300 representing an 18% yearly decline but a 1.1% monthly increase.
The City of Toronto’s average price of $1,071,043 for February 2023 increased by 8.4% compared to last month’s $987,842. That’s a decrease of 12% year-over-year. However, other cities within the GTA housing market experienced more significant changes in home prices. Brampton’s average home price has been battered with a 24% annual decrease to $1,028,192, while the neighboring Mississauga’s housing market saw an 18% price decline to $1,009,803.
One reason for the slowdown in Toronto’s housing market stems from higher borrowing costs due to the Bank of Canada rate hikes, as higher mortgage rates reduce home affordability. These rate hikes have been due to high inflation in Canada and have significantly impacted housing markets across Canada.
The Bank of Canada has decided to pause its policy rate hike, which has led some people to assume that the bank may cut rates in the future and reinflate the housing bubble. To determine the validity of this assumption, it’s essential to understand the root cause of the housing bubble in the first place.
From a technological standpoint, there are few limitations to building houses closer together or on top of one another. Therefore, in a free-market economy, the price of a home should be determined by its marginal cost of production, similar to any other commodity. However, in local elections, current homeowners often have higher participation rates compared to potential future homeowners
