Home sales dropped by double digits in Toronto and Vancouver in 2023 – The Globe and Mail

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A ‘for sale’ sign in front of a house in Oakville, Ont., west of Toronto, on Feb. 5, 2023. Home sales in the GTA were down 12 per cent last year from 2022, Toronto Regional Real Estate Board data show.Richard Buchan/The Canadian Press

Canada’s two largest housing markets saw double-digit declines in sales in 2023, as the highest mortgage rates in decades put home ownership out of reach for many would-be buyers.

There were roughly 66,000 residential sales in the Greater Toronto Area last year, according to new data from the regional real estate board. That’s down 12 per cent from 2022, and 46 per cent below the record number of sales seen in 2021.


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It was a similar story in Metro Vancouver, where residential sales totalled around 26,000 last year, down 10.3 per cent from the year before and 41.5 per cent from 2021.

Both markets saw a burst of activity in the spring and early summer after the Bank of Canada announced a “conditional pause” to interest-rate increases. But home sales dwindled after the central bank resumed monetary-policy tightening in June, raising its benchmark rate two more times to a 22-year high of 5 per cent.

“High borrowing costs coupled with unrealistic federal mortgage qualification standards resulted in an unaffordable home ownership market for many households in 2023,” Toronto Regional Real Estate Board (TRREB) president Jennifer Pearce said in a news release.

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The GTA real estate market did end 2023 on an up note, with home sales jumping 21.3 per cent in December compared with November on a seasonally adjusted basis. This may have been helped by a slight decline in mortgage rates, which have come down as bond yields have fallen in expectation of rate cuts by the Bank of Canada and the U.S. Federal Reserve in 2024.

“Relief seems to be on the horizon,” Ms. Pearce said. “Borrowing costs are expected to trend lower in 2024. Lower mortgage rates coupled with a relatively resilient economy should see a rebound in home sales this year.”

Most private-sector economists think the Bank of Canada will start lowering interest rates by the middle of this year. Meanwhile, interest-rate swap markets put the odds of at least one quarter-point rate cut by April at around 75 per cent, according to Refinitiv data.

The slowdown in the GTA housing market through the back half of 2023 fed through into lower prices. The home price index for the region, which captures all property types and removes the priciest properties, has declined for five consecutive months, ending the year at $1,094,000. That’s roughly the same price level as in December, 2022, and off the 2023 peak of $1,162,100 reached in July.

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Prices were somewhat sturdier in Metro Vancouver, where the benchmark price for all residential properties was $1,168,700 in December, up 5 per cent from December, 2022, the Real Estate Board of Greater Vancouver (REBGV) said on Wednesday.

A shortage of new listings helped prop up Vancouver home prices, said Andrew Lis, director of economics and data analytics at the REBGV.

“Ultimately, the story of 2023 is one of too few homes available relative to the pool of willing and qualified buyers,” Mr. Lis said in a news release.

“Sellers were reluctant to list their properties early in the year, which led to fewer sales than usual coming out of the gate. But this also led to near record-low inventory levels in the spring, which put upward pressure on prices as buyers competed for the scarce few homes available.”

In the GTA, there was an uptick in new listings in the spring and summer. But ultimately 2023 ended with fewer new properties coming onto the market than the year before. On a seasonally adjusted basis, new listings have fallen for three consecutive months, including a 12.6-per-cent drop from November to December.

“The trend for listings has been largely flat-to-down over the past decade, which is problematic in the face of a steadily growing population,” TRREB said.

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