Home-buying activity kicked into high gear with the advent of the traditional spring market as the Band of Canada (BoC) put pause to overnight rate hikes brought greater stability to the Greater Toronto housing market.
Opportunities presented themselves across various price points in the second quarter of the year, encouraging those seeking to trade-up from a condo, townhome, semi or single-detached housing to explore their options as average price edged higher.
Between January and June of 2023, the average price of a home in the Greater Toronto Area rose close to 14 per cent. Almost 39,000 properties changed hands in the first six months of the year, while year-to-date average price hovered at $1,144,512 in June, down about nine per cent from year-ago levels for the same period.
The suburbs came alive early as move-up buyers sought to secure detached homes at more affordable price points, and “drive until you qualify” became the new mantra. Demand was particularly brisk for detached homes in the $1 million to $1.5 million price range, although inventory remained a consistent challenge.
In the 416 area-code, potential buyers often found themselves frustrated by both the lack of and the quality of existing housing. Updated properties moved quickly in competitive situations, while tired, older homes lingered on the market.
Financing was top of mind with consumers, especially given the BoC’s move to raise the overnight rate in June and again in July. Buyers who found primary financing arrangements challenging were unlikely to consider the secondary financing required for renovation projects. There has, however, been a greater appetite for shorter term and variable-rate mortgages in recent months, with many would-be buyers concerned that they will “get caught up” in the wrong part of the cycle.
While the increase in overnight rates has taken some of the wind out of the sails of the housing market overall, most interested move-up buyers already have pre-approvals in place. Many of those transactions will come to fruition over the next two to three months. Once stability returns to the housing market – when the threat of rising rates no longer exists, and inflation rates settle into a more normal pattern – activity in the Greater Toronto housing market should resume a healthier pace.