Borrowing costs

Impact of Borrowing Costs and Housing Supply on the GTA Real Estate Market

Toronto Regional Real Estate Board

TRREB calls for longer amortization periods and more flexible stress testing

TORONTO, Sept. 02, 2022 (GLOBE NEWSWIRE) — In August 2022, 5,627 home sales were reported through the Toronto Regional Real Estate Board’s (TRREB) MLS® system, down from 34 .2% year over year – a lower annual rate of decline compared to the previous four months. The August sales result also represented a month-over-month increase from July.

Sales accounted for a higher share of new listings compared to the previous three months. If this trend continues, it could indicate some support for selling prices in the coming months. Year over year, the MLS® Home Price Index (HPI) increased 8.9% and the average selling price for all home types combined increased 0.9% to $1,079,500. The average selling price was also up slightly month-over-month, while the HPI Composite was lower than in July. Monthly growth in the average price against a decline in the composite HPI suggests a greater share of more expensive home types sold in August.

“While higher borrowing costs have impacted home buying decisions, existing homeowners nearing mortgage renewal also face higher costs. The federal government has an opportunity to provide greater housing affordability to existing homeowners by removing the stress test when existing mortgages are transferred to a new lender, allowing for greater competition in the mortgage market. Additionally, allowing longer amortization periods on mortgage renewals would help current homeowners in an inflationary environment where day-to-day costs have risen dramatically,” said TRREB Chairman Kevin Crigger.

“The Office of the Superintendent of Financial Institutions (OSFI) should determine whether the current stress test remains applicable. Is it reasonable to test homebuyers two percentage points above current high rates, or should a more flexible test that follows the interest rate cycle be applied? Additionally, OSFI should consider removing the stress test for existing mortgage holders who want to shop for the best possible rate at renewal time rather than forcing them to stay with their current lender to avoid the stress test. This is especially the case when no additional funds are requested,” said TRREB CEO John DiMichele.

“There are issues other than borrowing costs that impact housing affordability in the Greater Golden Horseshoe. The ability to increase supply is the longer term challenge. However, we are moving in the right direction on this front. The province’s mayor’s strong proposal, coupled with Toronto’s mayor John Tory’s recent commitment to expand home ownership and rental options, are examples of this. TRREB looks forward to hearing further initiatives from candidates running in the upcoming municipal elections,” said TRREB Chief Market Analyst Jason Mercer.

Summary of TRREB MLS® System Sales and Average Price August 1-31, 2022

2022

2021

Sales

Average price

New listings

Sales

Average price

New listings

City of Toronto (“416”)

1,892

1,031,979

3,785

2,988

999 510

4,212

Rest of GTA (“905”)

3,735

1,103,573

6,752

5,561

1,108,184

6,403

GTA

5,627

1,079,500

10,537

8,549

1,070,201

10,615

TRREB MLS® System Sales and Average Price by Home Type August 1-31, 2022

Sales

Average price

416

905

Total

416

905

Total

Detached

511

2,084

2,595

1,648,298

1,313,839

1,379,700

year/year. % To change

-26.0%

-30.3%

-29.5%

-1.7%

-3.7%

-3.1%

Paired

159

367

526

1,127,429

942 628

998 490

year/year. % To change

-29.6%

-28.7%

-29.0%

-7.3%

-1.1%

-3.4%

Townhouse

182

753

935

913 410

897 140

900 307

year/year. % To change

-44.0%

-35.9%

-37.7%

0.4%

3.7%

2.9%

Condominium apartment

1,028

479

1,507

736,940

656,339

711 321

year/year. % To change

-40.6%

-40.5%

-40.6%

2.6%

6.0%

3.6%

August 2022 Year-over-year percent change in HPI MLS®

Composite (all types)

Detached Single Family

Attached Single Family

Townhouse

Apartment

TRREB Total

8.85%

6.45%

8.38%

11.79%

17.87%

Halton Region

1.66%

0.62%

1.47%

3.46%

11.38%

Region of Peel

10.65%

9.59%

8.70%

13.17%

19.44%

City of Toronto

9.76%

4.99%

7.23%

15.18%

17.61%

York Region

11.52%

9.12%

13.28%

15.45%

20.83%

Durham Region

6.99%

6.39%

7.16%

11.66%

18.31%

Orangeville

8.72%

7.20%

8.71%

17.65%

27.97%

South Simcoe County1

9.30%

9.03%

10.90%

12.10%

20.73%

Source: Toronto Regional Real Estate Board

1South Simcoe includes Adjala-Tosorontio, Bradford West Gwillimbury, Essa, Innisfil and New Tecumseth

Please note that the methodology used to calculate the MLS® PPI has changed. For more information, click HERE.

TRREB MLS® System Year-To-Date Sales and Average Price Summary, August 2022

2022

2021

Sales

Average price

New listings

Sales

Average price

New listings

City of Toronto (“416”)

21,231

1,165,794

41,772

30,359

1,042,507

45,742

Rest of GTA (“905”)

36,444

1,258,251

76,482

57,536

1,089,770

80,393

GTA

57,675

1,224,216

118,254

87,895

1,073,445

126 135

YTD TRREB MLS® System Sales and Average Price by Home Type August 2022

Sales

Average price

416

905

Total

416

905

Total

Detached

5,748

19,894

25,642

1 860 675

1,522,968

1,598,670

year/year. % To change

-28.6%

-38.3%

-36.4%

9.9%

15.0%

14.4%

Paired

1,939

3,404

5,343

1,421,261

1,109,189

1,222,442

year/year. % To change

-30.3%

-36.4%

-34.3%

11.1%

19.5%

16.6%

Townhouse

2,128

7,590

9,718

1,060,987

1,006,280

1,018,260

year/year. % To change

-36.6%

-36.6%

-36.6%

14.5%

19.8%

18.6%

Condominium apartment

11,262

5,199

16,461

792 778

721 792

770 358

year/year. % To change

-29.6%

-29.0%

-29.4%

13.0%

21.2%

15.3%

Source: Toronto Regional Real Estate Board

TRREB MLS® seasonally adjusted sales and average price1

Sales

% change from month to month.

Average price

% change from month to month.

21st of August

9,413

-3.1

%

$1,117,762

2.7

%

September ’21

9,311

-1.1

%

$1,140,007

2.0

%

October ’21

9,925

6.6

%

$1,155,104

1.3

%

November ’21

9,335

-5.9

%

$1,181,226

2.3

%

December ’21

8,983

-3.8

%

$1,210,375

2.5

%

January 22

8,645

-3.8

%

$1,272,097

5.1

%

February 22

9,163

6.0

%

$1,285,129

1.0

%

March 22

7,876

-14.0

%

$1,252,680

-2.5

%

April 22

6,631

-15.8

%

$1,204,076

-3.9

%

May 22

6,074

-8.4

%

$1,172,093

-2.7

%

June 22

5,780

-4.8

%

$1,138,924

-2.8

%

22nd of July

5,296

-8.4

%

$1,107,613

-2.7

%

August 22

5,885

11.1

%

$1,130,463

2.1

%

Source: Toronto Regional Real Estate Board; Seasonal adjustment of the AIT. 1 Preliminary seasonal adjustment undertaken by the Canadian Real Estate Association (CREA). Removing normal seasonal variations allows for more meaningful analysis of monthly changes and underlying trends.

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Media inquiries:
Genevieve Grant, Manager, Public Affairs [email protected] 416-443-8159

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