Toronto Market Analysis

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.

Let’s get started.

Let’s review the big picture before we get into the details below. We saw the number of sales in Toronto rise by a large amount in February after two months of very low sales, and at the same time, our average sale price saw a pretty significant increase. On the supply side, we saw the number of new listings that hit the market rise, but by a relatively minor amount.

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

If we begin by looking at the number of sales that happened in February, 2023, we saw the number of sales increase to 1,744 in the month.

What’s it mean?

When we review the number of sales in Toronto, we see that there were about 58% more sales in February than January. In actual number of transactions, we went from 1,106 sales up to 1,744, which means on a month over month basis, there were approximately 640 more sales in Toronto.  This is a welcome increase, but given that January 2023 was the slowest month more than two years, we won’t be breaking out the champagne just yet.  We’re still only about half of what we normally see in a typical February, so it’s still a very slow market in this regard.

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

When we review the number of condo sales in Toronto, we see that there were about 58% more sales in February than January. In actual number of transactions, we went from 602 sales up to 952, which means on a month over month basis, there were approximately 350 more sales in the city in the condo apartment market.  This is a similar story to the market as a whole, as while we’re glad to see the increase, January 2023 was the lowest month in more than two years for condo sales in the city.  We’re likewise at about half the volume of condo sales we typically see in February.

In terms of prices, February, 2023 saw the average price for a home rise to approximately $1,071,000.

What’s it mean? 

In January the average price was $986,984 and February saw that go up by 8.5% to $1,071,084. That works out to a difference of about $84,000 when compared to last month.  While this is a good sign for homeowners (and less so for prospective buyers!), this brings us back to where we were in mid-October 2022.  The city is still down about $170K from our height of $1.24M back in April, 2022.

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

In January the average price for a condo unit in the city was $708,675 and February saw that go up by 2.8% to $728,271. That works out to a difference of about $20,000 when compared to last month.  We’re about $100K down from our March 2022 high for condo apartments of $832K, but all in all the condo market has been moving up and down in a smaller price band than the market as a whole since July 2022, always within an average price of about $710K to $770K.

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 increased slightly this month, with just over 3,300 new listings in February.

What’s it mean? 

Turning to the supply side, when we review the number of new listings that came onto the market in Toronto in February, we see that we had 3,313 new listings, compared to 3,010 new listings in January. That’s approximately 10% more new listings, on a month over month basis.  December, 2022 saw our lowest level in more than two years, with just 1,510 new listings hitting the market.  Our currently level is a bit better, but we are used to seeing more of a January to February increase, indicating that fewer sellers are coming back on the market as of yet.

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

When we review the number of new listings that came onto the condo market in the city in February, we see that we had 1,912 new listings, compared to 1,823 new listings in January. That’s approximately 5% more new listings, on a month over month basis.  If you do the simple math from above, you’ll note that about 2/3 of the new listings that came up in the city in February were condo units.  Our current levels are not too far off now from a typical February for the condo market, so we’ll see how this impacts prices moving forward.

In order to get a sense of how it felt if you were buying or selling in Toronto, we can look at how long it took properties to sell in February as well as what sale price sellers received as a percentage of their list price. When we do so, we see that the average days on market saw a significant decrease and the sale to list price ratio saw a bit of an increase. Combine them both and it felt quicker paced and more competitive.  Let’s get into more specifics below.

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

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 February, 2023, we saw the length of time it took for homes to sell drop by full week, down to 24 days on average.

How did it feel?

One of the clearest indicators of how it felt to be buying or selling in Toronto in February is how long it took for a home to sell. The average days on market in Toronto in February was 24 days, which is down 7 days from January, when it was 31 days. That means the length of time it took to sell went down about 23%. That’s a significant change, so it would have felt more competitive if you were transacting in the market.  Given that last month (January 2023) was the highest days on market in the last two years, any decrease in the length of time it takes to sell is a welcome change to the market.

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

When we look at just condo apartments, the average days on market in the city in February was 27 days, which is down 6 days from January, when it was 33 days. That means the length of time it took to sell went down about 18%. That’s a pretty significant change, so it would have felt more competitive if you were buying or selling a condo in Toronto.

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 February, 2023, the average sale to list price ratio went up to 99.8%.

How did it feel?

The other stat that we can look at to see how it felt in Toronto is the sale to list price ratio, or how much over (or under) the list price buyers had to pay in order to buy a home. The average sale to list price ratio in Toronto in February was 99.8%, which is up from January when it was 98.1%. That’s a 1.7% increase in how much over list price sellers received, which means the market felt more competitive in February.

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

When we look at just condo apartments, the average sale to list price ratio in the city for condo units in February was 98.5%, which is up from January when it was 97.9%. That’s a 0.6% increase in how much over list price sellers received, which means the market felt more competitive in February for people looking to buy or sell a condo in the city.

In order to predict what is coming next for Toronto’s real estate market, we can look at three predictive stats, which we go into in detail below. When we look at the big picture about what these stats predict for sale prices, we’re seeing some conflicting indications of what will come next, but overall it appears the average price will rise slightly in Toronto in March, both for the market as a whole as well as the condo market. There, we said it!

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

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 February, we saw the SNLR increase to 52.6%, which puts us pretty much back into a balanced market in the city.

What does this predict?

The first of our three predictive stats is the sales to new list ratio (or SNLR) which increased in February, going up by 15.9% to 52.6%, which is effectively a 43% increase in one month. This could push the average price up next month, however we do need to also consider what sort of market the current SNLR lands us in this month. In this case, given the SNLR of 52.6% we would describe Toronto as a balanced market. In such a market, there is strong likelihood that the average price will remain flat (unchanged) in the next month. When we combine the change from last month with the current SNLR, there is slight indication that prices will rise next month in Toronto.

How will the condo market do?

If we look at just the condo market, the sales to new list ratio (or SNLR) increased in February, going up by 16.8% to 49.8%, which is effectively a 51% increase in one month. This could push the average price up next month, but given we’re basically at a balanced market now, we would say there is slight indication that the average price will drop next month. When we combine the change from last month with the current SNLR, there is a good chance that prices will remain flat next month in for condo units in the city.

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.

February, 2023 saw the number of active listings increase to about 4,100 options for buyers.

What does this predict?

We had 4,110 active listings on the market as of the end of February, which is a 6% increase compared to January when we had 3,881 listings on the market at the end of the month. On it’s own, this sort of change in the number of active listings would predict that prices would drop as the level of available options for buyers has increased. Our second predictive stat therefore indicates that prices should drop in Toronto in March.  It is interesting that unlike most of the other stats we’ve been reviewing, we’re actually seeing more activity now than a year ago.  In February, 2022, we had about 2,800 properties for sale in the city and we’re now at about 4,100.  Given the relatively low level of sales, it seems to indicate that we’re seeing sellers return to the market while buyers wait to see what happens next with prices.

How will the condo market do?

On the condo side of the market, we had 2,640 active listings on the market as of the end of February, which is a 6% increase compared to January when we had 2,494 listings on the market at the end of the month. On it’s own, this sort of change in the number of active listings would predict that prices would drop in the condo market in Toronto, as the level of available options for buyers has increased. Condo listings make up a sizeable portion of the 4,110 active listings in Toronto (about two thirds!) and there continues to be lots of condo options available for buyers in the city, which means condo units should remain affordable as we move into March.

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.

February, 2023 saw Toronto’s months of inventory drop to 2.4 months.

What does this predict?

Let’s look at what our current months of inventory for Toronto predict what will happen to prices next month. The MOI as of the end of February was 2.4 months, which means that technically, the Toronto market is a seller’s market as of right now. We will take that with a grain of salt, as we’ve seen such low levels of inventory relative to demand over the past few years, we’ve had to adjust our definitions for the market. Nonetheless, on its own, our current months of inventory predicts that the average price in Toronto should rise in March.  We do need to take into account that after two months of the MOI being over 3 months, we’re back down to 2.4 months, a drop of almost one month’s worth of inventory in just one month.  That translates to a lot more deals taking place than we’ve been seeing recently, which is a good thing!  Add it all up and we do think that this stat shows prices will rise in Toronto in March.

How will the condo market do?

If we look at the Toronto condo market, the MOI as of the end of February was 2.8 months, which means that technically, the condo market is a seller’s market as well right now. Similar to the market as a whole, the months of inventory did drop for the condo market compared to January, when it was 4.1 months!  That’s more than a month’s worth of inventory drop and it’s actually the lowest level for the MOI in Toronto for the condo market since May, 2022.  We think the condo market will see a slight gain in March according to this stat.

There is a lot of information in the above charts and analysis and it’s worth taking a step back to understand what it all means.

The big picture for Toronto is an encouraging one.  We’re a far cry away from the frenzy of this time last year but that is actually a good thing and it hints at a more sustainable market.  After January saw historic lows in the level of sales in the city, February, while still far off the typical sales for this month, has been more active.  The increase in average price in the city of about $84,000 is also a sign that the market is not in a free-fall and we will see fluctuations depending on the economy, interest rate adjustments and most importantly, sentiment amongst buyers and sellers.

In our work with our clients, we continue to see a lot of uncertainty about what is coming next, but we also see a growing realization that simple, straight-forward predictions about what happens next are likely to be wrong.  It is no longer a case of prices will go up every month, or that prices will go down every month.  Sellers have adapted to the change and those who were only interested in selling because it felt like winning the lottery have decided to stay put.  Buyers are realizing that their increased purchasing power due to price drops in many markets won’t necessarily last forever and are returning, albeit slowly.  Say what you will about real estate in Toronto, but it isn’t boring!

Stay tuned for our next update on what is happening in Toronto, and what is coming next!