Here’s to a more stable real estate market in 2023

Looking back on 2022 is interesting and offers a peek at what 2023 will bring to the new home and condo market in the Greater Toronto Area.

Overall, new home and resale sales were down from 2021. The difference is that both pre-construction low- and highrise prices were up more than nine per cent, while resale prices were down 5.7 per cent. Rental rates for one-bedroom units were up from $1,964 to $2,696 (37.3 per cent), and for two-bedroom suites up from $2,481 to $3,184 (28.3 per cent). That’s great news for investors.

Lowering rates

Of course, mortgage interest rates went up during 2022, with current rates at 6.09 per cent for one-year fixed, and 6.5 per cent for five-year fixed. No matter how you look at it, these are amazingly low rates compared to the double digits people paid 20 and 30 years ago, sometimes more than 20 per cent. The five-year average is 3.45 per cent for one-year fixed, and 5.2 per cent for five-year fixed. The 10-year average is 3.27 per cent for one-year fixed, and 5.0 per cent for five-year fixed.

When you buy pre-construction, you have to think about what rates will be like in the future. I expect we’ll see a levelling and then a lowering of the prime rate in 2023, but I doubt we’ll ever see two-per-cent rates again. Remember, the government brought those in to help deal with the crisis we were experiencing.

New normal

Average resale listing prices dipped a bit from March through July, but increased during August and the fall, showing that the overall market has legs. The market seems to have stabilized, and prices have increased slowly but steadily. At In2ition Realty, we’ve had a successful year. We helped to launch thousands of units, and most of them are at threshold for construction. The only difference from 2021 is that instead of selling out in two weekends, projects are taking eight to twelve months to reach construction threshold.

In today’s market, new home and condo shoppers can go to sales offices and select the homes they want, rather than settling for whatever is left, which was the case for the last few years. Keep in mind, too, that with the recent passing of Bill 23, we will start to see more choices of townhomes and midrise condominiums in locations where they were not zoned for previously. This will enable families to share homes with grown children or in-laws, which is a normality in many other countries in the world.

As we settle into 2023, embrace the new normal and enjoy your home-shopping experience.