There appears to be early signs of life in the GTA housing market, after both buyers and sellers spent a good chunk of the last year on the sidelines. But with new listings at a 20-year low in February and higher borrow costs continuing to weigh on the market, it`s anyone`s guess what the typically busy spring season could bring. Will it look like 2022 when the beginning of an aggressive interest rate hiking cycle by the Bank of Canada brought the pandemic buying frenzy to a virtual standstill?
Or will the market spring to life, after months of little to no activity? There's been an uptick in terms of incoming transactions and we have seen an increase of 30% in deposits into our trust account. So there is an increase in activity. The average price of a Toronto home was $1,095,617 in February. It has been noted that prices have now largely returned to “quasi 2020” levels in the GTA and may even have found a bottom. Lately we are hearing more about multiple offer situations on properties, although those few bidding wars are resulting in homes changing hand for hundreds of thousands of dollars over asking price as was commonplace during the early days of the pandemic.
TRREB has already been calling for an uptick in buying activity and prices in the second half of this year “notwithstanding” the Bank of Canada's interest rate trajectory. Banking instability which now has some traders betting on earlier than expected rate cuts from the Bank of Canada could be a “wild card” that provides a further spark for the market. Now there's a bit of a wild card with what we've seen in the banking industry over the last week. That would certainly kick start things a little bit more than expected as we move through the year.
The Bank of Canada increased its overnight lending rate eight consecutive times between March, 2022 and January of this year, pushing borrowing costs to their highest level since 2007. Experts are saying that while the pace of increases certainly had an impact on demand there are some signs that is changing. So sure that probably balances out (with the higher cost of borrowing), but in Toronto affordability is worse than before.