Sales Commentary
Let us hope no one was waiting for the Spring market! April sales at 8,000 units were 27% lower than in March. To gain perspective, the March to April decline in 2021 was 13%. The importance is that sales in March will be the peak month for both 2021 and 2022. Also, we are now forecasting year-end sales will be down about 22% from 2021 in the ninety thousand range.
Prices are also softening. Buy where and by how much? That is where the sales-to-new listings ratio can help. We calculated this ratio across several markets. The ratios indicate that we are moving into a Buyers Market. The lower the number, the more it favours Buyers. The Downtown market has been more resilient.
In terms of Downtown markets, expect gas prices to continue to favour these markets. Pied-a-terre units are coming back into favour. Currently the average list price of a studio is $530,000. For those who need something larger in the 500-599 sf range, the average asking price is $680,000.
The fear of rising mortgage rates and new Government regulations has created uncertainty in the real estate market. There will be some price softening with less ‘prime’ properties. However, do not expect a major price correction. We also feel that interest rates will level off because we believe the U.S. market will correct sooner and the Federal Reserve will slow interest rate increases sooner. Our best guest is that buyers and sellers will become comfortable with this new market by September when we return to a more normal level of activity and prices.
SALES-TO-NEW LISTINGS RATIO, APRIL 2022 MARKET COMPARISON
Source: Toronto Regional Real Estate Board
“We calculated the sales-to-new-listings ratio across several GTA markets. The ratios indicate that we are moving into a Buyers Market. The lower the market, the more it favours Buyers.”
TRREB MLS SALES
Monthly with 3 Previous Years for Comparison
Source: Toronto Regional Real Estate Board
This chart plots monthly MLS® Sales for the current year and the previous three years. The recurring seasonal trend can be examined along with comparisons to previous years for each month.
Rental Commentary
The rental market Downtown is tightening fast. In April, there were 2150 condos leased. This was the biggest month so far. Even with new listings coming into this market, there are currently only 1380 condos available to lease as of Mid-May. We expect the peak rental market by July when students return to university.
For new Tenants expect higher rents. Another point to keep in mind is Landlords are now able to be more particular in who they will rent to. Tenants will need to provide a strong Credit Report and show good employment income. We have already seen Landlords select Tenants, not on just who will pay the highest rent, but also on the ability for a Tenant to be reliable going forward.
AVERAGE RENT IN APRIL 2022
