Toronto Market Analysis

The Toronto Real Estate Board tracks statistics using geographic boundaries called MLS areas.  These areas typically correspond quite closely to counties or regions.  In the case of Toronto,  it is pretty much exactly the City of Toronto.  With just over 2.7 million residents, Toronto includes Etobicoke, York (Old York, not to be confused with York Region), North York, East York and Scarborough, plus of course central Toronto.

We know your market and here’s where we prove it.

Below you’ll find the latest statistics on what’s going on in the Toronto area and our take on what it means.  We do that by answering three questions for you.

  • What happened in the Toronto real estate market this past month?

  • How did it feel to be a buyer or seller in Toronto this past month?

  • What’s going to happen next with Toronto real estate?

Let’s get started.

  • What happened in Toronto in June, 2022?

The story for the June real estate market in Toronto can be summed up with one word, and that word is down.  The number of sales in the city went down, the average price went down significantly and the number new listings also went down.  It’s relatively rare that we see all of these three major stats drop in the same month, so let’s look at what happened in June.

Let’s look at the specifics for what was going on in Toronto in our three big categories.

number of sales

If we begin by looking at the number of sales that happened in June 2022, we see they dropped around 9% compared to last month, down to about 2,400 sales.

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Sales in June 2022
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LESS sales in June than May
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LESS sales this June than last June 2021

What’s it mean?

Looking back at 2022, it is apparent that March was the start of the shift in our real estate market.  We had a high of just under 4,000 sales in the city and every month since has seen that number drop.  Given we typically see the spring market peak in April or even May, to see it peak in March is a sign that things are not typical in the Toronto market this year.  We dropped close to 10% from May to June and if we look at the sales we had in June 2022 compared to June 2021, we’re down by about 37%.  Make no mistake, we are seeing far fewer sales than we’ve gotten used over the past couple of years.

Tale of two markets – what’s going on with condos?

When we look at just condo apartment sales, the story pretty similar.  We had 1,165 condo apartment sales in June 2022, which is 38% fewer than at the same time last year (June 2022), when we had 1,895 condo sales.  Just like with the market as a whole, the condo market in Toronto peaked in terms of activity in March, with 2,130 sales.  We’re now at about half of that level of activity, so if it felt like you weren’t seeing many condo sales in a building you were watching, you’re probably correct.

average sale price

In terms of prices, June 2022 saw the average price for a home dip significantly to approximately $1,152,000.

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Average sale price in June 2022
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LOWER prices in June than May
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HIGHER prices this June than last June 2021

What’s it mean? 

After hitting an all-time price high in Toronto in April 2022 of $1.242M on average, we’ve had two months of dropping prices.  May saw a very slight decrease, but June went down about 7% in just one month.  Our new average price of $1.152M is the lowest price since January 2022 and the first time we’ve dipped below $1.2M since February 2022.  At the same time as we saw about a 7% month over month drop in average price, when we compare against this time last year, we’re only up 7% compared to June 2021.

Tale of two markets – what’s going on with condos?

The condo market also dropped in June, but going down by more modest 3% month over month decline.  The condo mark has been seeing steady, similar sized price drops (between $15K to 20K each month) since it’s all time high in March 2022 of $832,000.  We’re now at an average price in the city of $771,000 for a condo unit and while that $50K drop from the height may seem bad for recent condo buyers, the market for condo units has appreciated to the tune of over 7% since June 2021.

Number of New Listings

Our final source for what’s been happening this month in the Toronto real estate market is the number of new listings that came on the market, which dropped by almost 13%, down to 5,988 new listings.

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New listings in June 2022
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LESS new listings in June than May
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LESS new listings in June than last June 2021

What’s it mean? 

One of the hallmarks of a shifting market is a disconnect between the number of sales and the number of new listings.  If sales are going up while new listings are going down, you tend to get price increases as less inventory stays on the market and buyers start to panic.  A similar dynamic holds true with the reverse, when we’re seeing fewer sales at the same time as increasing numbers of new listings, in that prices start to decrease due to more inventory and sellers start to panic.  In June 2022, we saw our sales go down at the same time as we saw our number of new listings go down.  It appears that sellers are finally getting the memo that now is not the time to sell their home!

Tale of two markets – what’s going on with condos?

When we look at just condo apartment new listings, we see the same story.  The number of sales dropped by 8% and the number of new listings also dropped by 8%.  We still see a pretty strong disconnect between the two though, as we had 1,165 sales in June 2022 and 3,140 new listings in the same period.  Just over a third of properties that hit the market sold in the month and that tends to strongly influence buyer and seller expectations, with prices dropping as a result.

  • How’d it feel to be buying or selling in Toronto in June, 2022?

June is often the last hurrah before the slower summer market starts in earnest, but this year we appear to have gotten that slowdown started much earlier than normal.  Our days on market continued to rise, as properties sit for longer before selling, and the average sale to list price ratio dropped at the same time, with sellers commanding a much lower premium over list price.  If you were buying or selling, it felt slower paced than it has been for a while and decidedly less competitive than we’ve been seeing.

Let’s look in detail at the two specific stats that tell us how it felt to buy and sell in Toronto this month.

Days on Market

One of the best indicators of how a market feels is how long homes remain on the market.  The quicker they fly off the market, the more frantic and stressful it can be for both sides.  While it may seem like that is always positive for sellers, make no mistake, it can be stressful when sellers receive lots of attention or offers quickly.  The fear of making a mistake and pressure to decide quickly is hard on both buyers and sellers.

In June 2022, we saw the length of time it took for homes to sell go up three days, to 16 days on average.

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on average to sell in June 2022
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LONGER to sell in June than May
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LONGER to sell this June than last June 2021

How did it feel?

In March 2022, we hit a two year low in the length of time it took to sell a home, with the average days on market of just 9 days.  Since then, we’ve seen the average days on market rise each month and June 2022 saw another three day increase, up to an average of 16 days on market now.  That’s the second highest this year (after January 2022 when it was 18 days on average) and considerably slower from this time last year, when it was 13 days.  While three days may not seem like much, remember that is on average, and when you’re talking about the low number of days we typically see in Toronto, that’s a very noticeable 23% difference, and it absolutely felt slower.

Tale of two markets – how did it feel if you were buying or selling condos?

When we look at just condo apartments, the story about days on market is similar.  In March 2022, we hit a two-year low of 10 days on average for a condo unit to sell in the city.  As of June 2022, we’re now at 18 days on average, up three days from last month.  Just like with the market as a whole, we’re three days slower for the condo market compared to this time last year (June 2021) and that equals a 20% difference in how long it takes to sell a condo unit.  It definitely felt slower in June, which was the continuation of a trend that is worrying to condo owners hoping to sell.

Sale to List Price Ratio

The other statistic that gives us a good idea of how it feels to buy and sell in this month’s market is the sale to list price ratio.  This is a percentage that tells us how close to the price the sellers wanted they actually received from buyers.  If the sale to list price ratio is 100%, it means buyers paid exactly what the sellers were asking for the property.  If it’s under 100%, then the buyers negotiated a discount and if it’s over 100%, then the sellers got even more than they were asking for as a sale price.

In June, the average sale to list price ratio dropped to 101.3%.

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Average sale to list price in June 2022
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LOWER ratio in June than May
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LOWER ratio this June than last June 2021

How did it feel?

For the fourth month in a row, sellers have been getting less of a premium for their homes in Toronto.  We hit a two year high in February 2022 of 113.6%, which meant that buyers paid, on average, 13.6% over list price for homes in the city.  We’re now down to 101.3%, so while there are still homes selling for over asking, it isn’t for much over asking!  That is the lowest sale to list price ratio in Toronto since January 2021 and is more like what we saw for most of 2020.  It definitely felt less competitive and buyers felt much more in control when it came to the price they would pay for a home.

Tale of two markets – how did it feel if you were buying or selling condos?

When we look at just condo apartments, the sale to list price ratio told the same story, with a drop from a two-year high of 110.4% in February to 100.4% in June 2022.  That’s down about 2% compared to last month (May 2022) and it is likely reflective of sellers switching listing strategies to offers anytime, rather than holding back offers.  If you were buying a condo in Toronto in June, it would have felt more relaxed than we’ve seen so far this year, or throughout all of 2021.

  • What’s going to happen in Toronto in July, 2022?

We predicted that the overall average price in Toronto in June would drop, both for the market as a whole as for the condo market.  We were absolutely right, with significant price drops (6.6% for the market as a whole and a more modest 3.7% drop in the average condo unit price) across the board.

When we look at the predictive stats for Toronto in June, we see signs that the average sale price should drop again in July.  Our sales to new listing ratio rebounded slightly after hitting the lowest level we’ve seen in two years, but is still quite low by Toronto standards.  Our active listings went up by over 300 properties and our months of inventory jumped to the second highest we’ve seen in the past two years.  We are predicting a price drop in July for both the market as a whole as well as the condo market.

Let’s take a more detailed look at the three predictive stats we have for what comes next in the Toronto market.

Sales to New List Ratio (SNLR)

Let’s start with an acronym!  The Sales to New Listing Ratio (SNLR) tells us how many of the sales we saw this month were new listings in the month versus existing listings that had been on the market from previous months.  It’s considered a strong predictor of what happens in the next month because it tells us if inventory is sticking around or selling quickly.

  • If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases.
  • Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase.
  • Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month.  This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay.

In June, we saw the SNLR rebound slightly to 40.4%, still what we would call a buyer’s market for only the 2nd time in years.

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Sales to new listing ratio in June 2022
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HIGHER ratio in June than May
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LOWER ratio this June than last June 2021

What does this predict?

The sales to new listing ratio has been dropping in Toronto since it hit a two year high in December 2021 0f 121.5%.  Every month since then, until now, it’s been going down.  After hitting a two-year low last month (38.9%), we’ve rebounded slightly to just over 40%.  This minor recovery is due to a dip of about 13% in the number of new listings hitting the market while sales went down by a more modest 9%.  Despite the reversal of a six month trend, we’re at extremely low SNLR for the city and it absolutely predicts that prices will drop in July as buyers take advantage of properties sitting on the market.

How will the condo market do?

The SNLR for the condo market also went up by a very slight amount, going from 37.0% to 37.1%, which is the lowest possible increase that can happen and still be called an increase.  Just like with the market as a whole, it’s due to fewer sales (8% less than last month) but also fewer new listings (8% less than last month as well).  While it is technically an improvement, prices for condos will drop according to this stat, as buyers have even more options of stale listings on the condo market than the market as a whole.

Number of Active Listings

As we turn to active listings, we need to be clear about what that means.  The number used for active listings is the number of actual, currently for sale properties at the end of the month.  This number is therefore comprised of the older listings already on the market at the start of the month, plus any new listings that didn’t sell in the month, less any older or new listings that did sell before the end of the month.

June saw the number of active listings increase somewhat to 6,291 options for buyers.

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Active listings in June 2022
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MORE active listings in June than May
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MORE active listings this June than last June 2021

What does this predict?

June 2022 was the sixth month in a row that the number of active listings in Toronto increased and we’re now at just under 6,300 active listings on the market.  To put that in perspective, we had a two-year low of active listings in December 2021 of just 1,800 or so properties.  We went up to 1,900 in January 2022 and every month that has passed, we’ve added about 1,000 units each month.  That’s on top of the 1,000 additional units the month before and before and so forth.  This is the first month in a while that we saw a relatively modest increase (319 listings) in the number of new listings hitting the market, but the high level of options for buyers definitely predicts prices will rise in July.

How will the condo market do?

The condo market followed the market as a whole, but with slightly less consistent numbers.  From our two year low of 1,100 condo units for sale in January 2022, we went up to 1,500 in February, then 2,000 in March, then 2,600 in April, then 3,300 in May and now we’re almost at 3,600 condo units on the market.  That’s more than triple the level of active inventory of condo units in just six months.  It certainly indicates we will see the average price drop in the condo market in July , though that may be mitigated slightly by already having had three consecutive price drops in the past three months.

Months of Inventory (MOI)

Finally, let’s look at the Months of Inventory in Toronto.

This statistic tracks how long it would take for all properties on the market in Toronto to sell if we stopped having any new listings.  The higher the MOI, the more of a buyer’s market, the lower the MOI, the more of a seller’s market.  Somewhere between three to four months is considered a balanced market.

June saw Toronto’s months of inventory jump up to 2.6 months.

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Months of inventory as of June 2022
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MORE inventory in June than May
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MORE inventory this June than last June 2021

What does this predict?

Toronto has traditionally had extremely low months of inventory, often under 1.5 months and it hasn’t been to uncommon to see it drop below one month.  This is another way of saying that we’ve had consistent levels of sales (demand) and whatever the level of listings (supply), it hasn’t been enough to satisfy many buyers before it would run out.  It has, in large part, been the story of why our real estate prices have risen so much over the last number of years.  Our current 2.6 months of inventory is actually the highest in the city since May 2020, when the condo market and COVID was pulling up the MOI considerably.  It is still technically considered a seller’s market, but for Toronto, over two months of inventory is definitely a balanced market and indicates that prices should remain mostly flat or drop.  It is astonishing to note that our current MOI is double what it was in June 2021, so there are definitely fewer buyers on the hunt.

How will the condo market do?

The months of inventory for the condo segment increased to 3.1 months in June 2022, up from 2.6 months in May 2022.  It’s a far cry from the 0.8 months of inventory that we saw in January and February of 2022.  Just like with the market as a whole, we have doubled the level of inventory compared to June 2021 and while this stat on its own predicts prices will stay relatively flat, given the other predictive stats, it is likely that condo prices will drop in July.

  • What’s it all mean?

When we look at all of the various statistics for Toronto’s June real estate market, we see a picture of a shifting market that may be coming to grips with the new reality.  Prices have been dropping, as have sales, but new listings are finally dropping at a quicker rate than sales.  We still have near record levels of active listings and given mortgage rate changes, it seems likely that more buyers will be sitting out over the next few  months as they assess options.

One of the most visible changes to the public at large would be the reduction in the average sale to list price ratio.  We got used to seeing media stories about properties selling for half a million over ask price with 40 offers and that time is now officially over.  With significant (between 1/5th and 1/3rd of listings) numbers of properties failing to sell on their offer night, more sellers are choosing to forego a marketing period and instead list at the price they want and negotiate for close to it.

Remember that real estate agents who are listing and buying properties on a weekly basis are the people who have the best sense of what is happening right now.  If you’re considering buying or selling, then the information in this review is likely helpful, but you need to work with agents who can take what has been happening, combine with what is happening now, and who understand what’s coming next.  If that sounds like the sort of agent you want to work with, then don’t hesitate to get in touch with us!