GTA June 2023 Home Sales Surge

25 July 2023 By: devonjones0 comments

The Greater Toronto Area (GTA) witnessed a significant surge in new home sales during June compared to the previous year. However, despite this impressive growth, the numbers still fell short of the 10-year average for the region. The Building Industry and Land Development Association (BILD) and Altus Group recently released data shedding light on the current state of the GTA’s real estate market. This blog will explore the key findings from their report, shedding light on the impact of rising interest rates on homebuyers and the housing market’s overall affordability.

New Home Sales Overview: In June, 2,526 new homes were sold in the GTA, reflecting a remarkable 32% increase compared to the same month in the previous year. Despite this growth, sales remained 30% below the 10-year average. The most notable sales were in the condominium apartment segment, which accounted for 1,957 transactions in June, marking an 11% rise from June 2022. However, this number was still 21% below the 10-year average. On the other hand, single-family home sales experienced an astounding 256% increase from June 2022, with a total of 569 sales last month. Nevertheless, this figure fell short of the 10-year average by 49%.

Interest Rates and Buyer Hesitancy: One of the key factors impacting the GTA’s real estate market is the recent rise in interest rates. According to Edward Jegg, the Research Manager at Altus Group, the surge in new home sales experienced a setback in June due to buyer hesitancy triggered by rising interest rates. The Bank of Canada raised its policy interest rate by another 25 basis points, up to 5%, marking the 10th rate hike since March 2022. While this move aimed to control inflation, it also significantly impacted potential homebuyers’ affordability and willingness to purchase.

Softening Impact on Prices: Amid the rise in inventory, June saw a substantial increase in new home remaining inventory, reaching 16,379 units. This surge in supply had a “softening impact on prices,” according to BILD. Consequently, the benchmark price for a new condo apartment experienced an 8.4% year-over-year decline, reaching $1,090,494. Similarly, the benchmark price for new single-family homes dropped 6.9% yearly, now at $1,716,467.

Impact on Housing Supply and Affordability: BILD’s President and CEO, David Wilkes, emphasized that the recent interest rate hikes are causing prospective homebuyers to take a step back, resulting in a decrease in housing demand and subsequently reducing price pressure. These interest rate increases also delay adding much-needed housing supply to the market, as pre-construction sales are crucial in financing new developments. This delay further exacerbates Canada’s housing supply and affordability crisis.

Future Outlook: Experts speculate that the Bank of Canada might pause at a 5% interest rate during the next rate announcement, scheduled for [upcoming date]. The outcome of this announcement will have significant implications for the GTA’s real estate market and potential homebuyers.

The GTA’s real estate market experienced a notable surge in new home sales during June. However, rising interest rates are evident, influencing buyer hesitancy and affecting the overall affordability of properties. As the market adapts to changing conditions, prospective homebuyers must remain vigilant and seek expert guidance to navigate these challenging times. The GTA’s housing market remains dynamic, and it will be essential for buyers to stay informed and make informed decisions to achieve their homeownership dreams.