TORONTO — The Greater Toronto Area's real estate board saw home prices plateau in January after being in free fall and depressing sales since spring, but brokers see a return to activity already taking shape.
The Toronto Regional Real Estate Board calculated the home price index to be $1,078,900 for last month, a slight drop from $1,081,400 in December.
The average home price followed the same pattern with January coming in at $1,038,668, which was little changed from $1,051,031 in December.
The flattening follows several months of steady declines, which saw prices fall nearly 20 per cent from their spring peak and 16.4 per cent from a year ago.
The fall has largely been attributed to rising interest rates, which tend to move in tandem with mortgage rates and weigh on homebuyer sentiment.
With the Bank of Canada hiking the interest rate eight times in the last year alone, potential sellers have left their homes off the market, while buyers have sat waiting for prices to hit their bottom.
"There’s a standoff in the housing market with few people wanting to sell amid falling prices, and even fewer looking to buy amid higher borrowing costs," Priscilla Thiagamoorthy, BMO Capital Markets senior economist, said in a note to investors.
However, Bank of Canada governor Tiff Macklem has indicated the central bank will pause hiking interest rates as it assesses the economy and inflation.
"Although rates will remain high for some time, at least the forward guidance provides some clarity, allowing sidelined buyers to enter the market knowing that we are around peak rates," said Thiagamoorthy.
Several in the housing market believe sidelined buyers and sellers will soon be ready to make their long-awaited moves and note many have already sprang into action.
Their readiness is being prompted by a change in attitude and a fear that they could miss their chance to take advantage of lower prices, said Michelle Gilbert, a Toronto broker with Sage Real Estate Ltd.
"They're starting to realize we might be close to the bottom," she said.
"I think we still have more price softening ahead of us, but they don't want to wait till the bottom anymore in case they miss it."
Sellers, she said, also don't want to wait for the bottom. They want to make as much money on their homes as they can and are tired of waiting to make a move.
Once the new year began, Gilbert said sellers that reached out to her were mostly people interested in upgrading their homes to get a bit more space.
"They have accepted the fact that their house or condo will sell for X amount and they're not going to make much of a profit," she said.
"A lot of them are breaking even, but are willing to do that to attain what's on the other side for a lower price."
Their activity left new listings down 3.7 per cent year over year at 7,688, but up from 4,074 in December, while active listings were up 124.6 per cent from last year.
However, January home sales were down 44.6 per cent from the same month a year ago.
Sales last month totalled 3,100, a shift from 5,594 a year earlier, when the market adopted a frenzied pace and bidding wars were the norm.
Those wading into the market again are triggering more visits to open houses and resulting in buyers willing to place bids, which are increasingly being met with competition, though it pales in comparison to the rival offers made at the height of the COVID-19 pandemic.
"The majority of offers our team has done in the last few weeks had multiple offers and sold within days," Cailey Heaps, president and chief executive of the Heaps Estrin Team, said in an email.
She's seeing about 40 showings per home every week, up from the five per home per week she booked last fall, and thinks it's a sign that "there are definitely more buyers in the market."
Victor Tran of Rates.ca has also detected signs of a return to the market.
“We are seeing a huge increase in pre-approvals. A lot more than I was expecting,” he said, in a news release.
“The Bank of Canada announcement coupled with OFSI looking into tightening lending regulations has signalled to many potential homebuyers that the time to buy is now.”
This report by The Canadian Press was first published Feb. 3, 2023.
Tara Deschamps, The Canadian Press