The average price of a house went nearly unchanged since the same month last year in the Greater Toronto Area (GTA). In August of 2023, the average price of a home was around $1,082,496 on TRREB, compared to $1,079,048 in August 2022. This represents a year-over-year price growth of 0.3 per cent. 

The GTA seems propped up by the 416 in August, with 905 properties (houses in the GTA outside of the City of Toronto) dropping from an average house price of $1,257,484 in August of last year to $1,155,308, a decrease of over 8.0 per cent.

Similarly, the number of homes sold in August of 2023 dropped — to 5,245 from 5,584 sales in the same month last year — down by about 5.2 per cent.

August is much like January to me; It’s one of the slower months of the year. I don’t necessarily love using August for comparative purposes against other months, but besides any other August, it’s generally worth looking at. Comparing this year against last year’s August it tells me that the market hasn’t really changed a whole lot.

Waiting on the world to change

Honestly, I think most market participants would agree with me there. By August of 2022, the market had shed most of its spring market gains and was in a sense of confusion and fear heading into the fall selling season. Suburban house prices were still retreating at a relatively alarming rate, and the core seems to be growing in its attractiveness. Sentiment hasn’t really improved much since last August despite trailing one of the strongest spring markets we’ve ever seen in Toronto real estate. The summer months promptly shrugged off any sense of recovery and brought us back to where we were last summer: Sitting. Waiting. Wondering what the Bank of Canada will do next. 

Our strong spring market this year was accompanied by a pause from the Bank of Canada, while last year’s dull fall market was against the backdrop of continued rate hikes. Can another pause resurrect the market, or is the lagging impact of interest rate hikes finally catching up with the Toronto real estate market?

Time under tension

One key theme seems to be gradually dissipating with time: the notion that tight supply could keep the pricing environment stable. We’re revisiting some of the largest year-over-year and month-over-month changes in supply we’ve seen since the rate hiking cycle began, with new listings and active listings both up in the range of 16 to 17 per cent. It is worth noting that while August is typically a slow month for home sales, it is also a slow month for listings. It could raise a few eyebrows seeing this kind of supply activity in a month where realtors are characteristically free to golf with their cell phones on silent.

The longer we spend in this rate environment, the longer I expect this supply trend to continue, and the more that pushes us closer and closer to a buyer’s market. While I’d say we’re generally in a balanced market based on sales-to-new-listings ratio and months of inventory — with some areas slipping into buyers market territory already.

On the brighter side, properties are selling faster, with both measures of days on market falling pretty steeply, and that could keep some of the growing supply turning over at a faster rate, provided the market is price-discovering in an efficient fashion.

Expect talk of recession and growing recessionary signals to prove a headwind for Toronto real estate for the remainder of the year. September data will set the tone enough to be decisive in telling us whether or not we’ll finish strong or fizzle out for the rest of 2023.