Welcome back to my monthly report on the status of the Real Estate market in the GTA..

Let’s get straight to it. February’s average sale price just increased from January’s by 5.5%. One could argue that January prices are traditionally low, so that increase is no big deal. I would say that there are two factors that make it a big deal. Firstly, this is the first increase in average sale prices since February 2022. So often my clients will ask me when we are going to see prices rise again. Well, we just did, and a 5.5% increase in the midst of what we have been through over the past 12 months is certainly nothing to scoff at.

Secondly, since June of last year, there have been virtually no changes, increase or decrease, in the average sale prices, save and except a slight uptick in October 2022 that dropped back down in November. It’s been flat for all that time and now we have a change, and that change is up and up by 5.5%. Just to put that into perspective for you, the average GTA home cost, $57,000 more in February than it did in January. If you don’t think that’s significant, you’re not paying attention.

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Prediction:

In my last month’s report, I spent a large amount of time talking about one particular graph, SNLR vs Annual Price Growth. In that report I basically said that this graph is showing that the orange line (Annual percent change in price), was lower than it has been in years, and that the two lines (blue and orange) must soon intersect, staying true to their symbiotic relationship. My prediction at that time was that prices will rise some time in 2023. I am now ready to concede that that prediction needs to be accelerating, and here’s why.

A) The blue line has taken a very large jump in February forcing the orange line to soon follow.

B) We just experienced a significant price increase month over month.

C) Bank of Canada did not increase their rate today, March 8th, 2023.

D) Inflation has dropped from January’s 6.2% to 5.9% in February, a bigger drop than expected.

If average selling prices do not continue to rise, it will be the result of a combination of the following:

A) Bank of Canada increases rates on April 12th and/or June 7th. 

B) Somehow inflation reverses course and increases.

C) There is a huge influx of listings that come on the market that will overcompensate for the already crowded number of buyers wanting to buy.

I believe the first set of circumstances far outweigh the possibility of the second occurring, and prices will continue to rise throughout our spring market. If by some chance the Bank of Canada chooses to reduce their interest rates, this will spark a feeding frenzy and all the pent-up demand will again cause multiple offers and sale prices way over asking prices. Which scenario do you prefer?

Ken Wilder BA, ABR, CH