Toronto’s real estate market posted an impressive culmination to its spring market rally, with a few notably positive indicators from the Toronto Regional Real Estate Board’s (TRREB) May data: 

• The average price up 3.7 per cent since last month, though still 1.2 per cent below this time last year.
• Home sales increased 20 per cent since last month and are now up almost 25 per cent since last year. 
• New listings increased 36 per cent since last month, with a total of 15,194 listings in May.
• The market remained tight, with listing supply 18.7 per cent below last year and well below the long-term average, keeping most markets in balanced or sellers-market territory.
• Listings are selling in 14 days on average — almost 20 per cent faster than last month but still 16.7 per cent slower than last year’s overheated spring market. 

Understanding the source of the supply

While still down 19 per cent compared to May 2022, the month-over-month increase in new listings was a much-needed relief to the tight supply and demand imbalance that kept sellers in a price-setting position for most of the year to date. 

Understanding the source of this supply could provide insight into how the remainder of the year plays out for Canadian real estate. If the supply was primarily driven by move-up buyers and life changes, the market could be on a road to recovery. On the other hand, if the market was driven by financial stress and offloading of investment assets, it could be evidence that the market will experience some headwinds against a recession this year. 

Further hiking from the Bank of Canada, as predicted by the financial markets for next week’s rate announcement, could exacerbate any stress-induced selling we see ahead. 

Supply velocity did seem to pick up toward the end of May — an opportunistic selling phenomenon that usually follows periods of high price velocity, which we’ve seen since the beginning of the year. Continued opportunistic selling could put an end to the spring seller’s market and, with it, price growth — although this happens annually, as average price typically falls from May until August each year. 

Where is the demand coming from?

TRREB notes in their release that strengthening demand is a continuing support for house prices in the Greater Toronto Area, and there is no shortage of headlines to support that statement: 

1. Canadian Immigration set another record in Q1 of this year, with over 150,000 permanent residents added. 
2. Canada led the world as a destination for international students, welcoming a record 551,405 international students in 2022.

Both of these demand-side supports, combined with a lagging supply side, could keep the Toronto real estate market in a state of excess demand throughout the year. The sustained pressure of interest rates and the recession that they threaten could drastically change the winds of fate in the coming months, but as it stands, Toronto’s real estate market was still a seller’s market in May. 

Daniel Foch

Daniel Foch is the Chief Real Estate Officer at Valery.ca, and Host of Canada’s #1 real estate podcast. As co-founder of The Habistat, the onboard data science platform for TRREB & Proptx, he helped the real estate industry to become more transparent, using real-time housing market data to inform decision making for key stakeholders. With over 15 years of experience in the real estate industry, Daniel has advised a broad spectrum of real estate market participants, from 3 levels of government to some of Canada’s largest developers.

Daniel is a trusted voice in the Canadian real estate market, regularly contributing to media outlets such as The Wall Street Journal, CBC, Bloomberg, and The Globe and Mail. His expertise and balanced insights have earned him a dedicated audience of over 100,000 real estate investors across multiple social media platforms, where he shares primary research and market analysis.