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GTA Condo Market Changes from Early 2022 to Late 2023

Posted by Editor on December 19, 2023
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As we approach the end of 2023, we have seen a steady decline in housing market activity since peaking in 2022. Home sales and median prices have declined month after month, leaving the buyer’s market conflicted and confused. This worries some investors. And it’s about knowing where things are going. 

Below, we’ll take a closer look at how the apartment market has fared in recent years, explain why things are the way they are, and reassure investors about where the market is headed. Our data comes from a recent report by Bullpen Research & Consulting Inc., a Toronto-based real estate consulting firm, and the Toronto Regional Real Estate Board’s Quarterly Apartment Market Report.

 

Downward trend in 2023

One of the reasons 2023 will be so different from 2022 is that last year was a very successful year. By August of last year, the average asking price for a new condo in the Greater Toronto and Hamilton Area (GTHA) had steadily increased to $1.62 million, before falling sharply through 2023. Recently, the average asking price for a new condo has dropped to about $1.2 million, a difference of more than -25% from about 15 months ago.

 

On the other hand, the average condo sale price in the first quarter of 2022 was $790,398, but in 2023 it was $700,566, a difference of -11.4%. Not all cities in the GTHA have been equally affected by falling prices. If we look closely at the price per square meter (PSF) of unsold apartments, we can see that in some places the average PSF has decreased compared to the previous year and in others it has increased. For example, in Toronto, the average PSF decreased by -1.8% from $1,637 to $1,607. Mississauga and Kitchener saw average PSF declines of -0.6% and -6.6% respectively.

 

However, Hamilton’s average PSF increased 10.9% from $908 to $1,008. Other local governments, including Oakville (1.2%), Bourne (4%) and Pickering (4.4%), also saw increases starting in 2022. So we can see that the real estate market has not suffered in the Golden Horseshoe and that the real estate values ​​of the entire region are still in our pockets.

 

Of course, inflation and rising interest rates were the main causes of the market decline. Potential home buyers have refused to take out expensive mortgages even as prices have fallen. However, these 2023 figures can be seen as balancing the unusually rapid growth that characterized the first half of 2022.

Below we discuss the top performers for 2022 compared to previous years.

 

 

Unusually High growth in 2022

As previously mentioned, 2022 saw exceptional increases in average apartment prices in the GTHA, surpassing previous years. One of the reasons why cases are higher than normal may be due to post-pandemic effects. After a period of foreclosures and economic uncertainty in 2020 and 2021, the real estate market gained momentum in 2022.

Here are some photos of some particularly useful activities from that time: The average asking price for a new condo at the end of 2020 was $1.07 million. At the end of 2021, it was $1.3 million. When that figure reached $1.62 million in mid-2022, it was clear that prices were rising at an alarming rate. This prompted the Bank of Canada to raise interest rates in March to slow rising inflation.

The last few years have been a tumultuous time for average sale prices. At the start of the pandemic, home prices fell from $654,532 in 2020 to $610,044 and rose $100,000 to $710,087 by the end of 2021. It later rose to $790,398 in 2022, but was later suppressed by an interest rate increase.

In addition, the average PSF of new apartments in 2022 grew rapidly, reaching almost twice the growth rate of the previous year. The average PSF for a new condo in the GTHA was $1,122 in 2019, an 8.1% increase to $1,212 in 2020 and a 6.9% increase to $1,296 in 2021. In the following year, this indicator increased by 18.9%, reaching $1,541. These double-digit jumps, with some cities seeing much greater growth than others, were felt from Toronto (13.8%) and Mississauga (20.2%) to Hamilton (33.5%) and Kitchener (41, 2%). 

As a result, the market’s poor performance in 2023 can be seen as a readjustment after the unusually high numbers in 2022. Of course, we can’t do that because the Bank of Canada’s interest rate hikes were intended to suppress inflation. . The price drop is said to have been unexpected.

 

What year will 2024 be?

 

One thing to remember about the housing market is that it is inherently cyclical and resilient. There are highs and lows over time, but historically the market still moves higher, rewarding long-term condo investors who are not immune to temporary price drops.

The entire industry may be in recession by 2023, but there is hope in 2024. The correction we are currently seeing in the housing market is much needed and will not last long. The situation will pick up in two years as about 1.5 million new immigrants arrive in Canada, increasing demand in a housing market that is still undersupplied. Since quiet markets precede active markets, we expect the market to catch fire again soon. So, we are waiting for the warmth of spring and summer, and those who want to buy an apartment are looking forward to the quiet of winter. Prices are very low compared to 2022, and interest rate hikes have already slowed and may taper off in 2024 or 2025. In these cases, experts predict that the market will heat up much more next year, and business will return in the warmer months.

 

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