The Toronto house market is a challenging environment for buyers and sellers of all levels. Like other areas, it has experienced upward trends in prices over the last few years. However, the Toronto real estate market is set to change over the next year.
To understand the place of both clients and employees, here are the trends to watch in the Toronto house market in 2023. Hopefully, the information below will help you to prepare for the coming changes.
What is the State of the Toronto House Market at the End of 2022?
It’s fair to say the Toronto real estate market is moving in a positive direction for buyers, but perhaps not for sellers. In short, most property prices decreased in 2022 compared to 2021.
Some stats on home price Canada in Toronto are:
· The average house price decreased by 7% compared to 2021.
· That said, the average house price was $1,079,395.
· Detached home prices decreased by 11%.
· Semi-detached properties fell by 14%.
· Condo apartment prices remained the same.
However, the cost for rent home in Toronto has gone up in 2022. At the start of the year, it was around $2,200 a month to rent an average property in the city. By August, this had gone up to $2,528 a month, an increase of 21% compared to August 2021.
Unfortunately, rent prices show no signs of slowing down in 2023 as they continue an upward trend. It’s fair to assume that, without some kind of intervention, rent prices won’t decrease on their own.
Why is the Toronto Real Estate Market so Expensive?
Toronto is the second most expensive area in Canada to buy a house, only just behind Vancouver. Interestingly, the average price in Toronto is nearly double that of the third most expensive city, Ottawa. But why is this? Well, there are plenty of reasons, but 3 of the most important include:
As any real estate agent (or business operator) will know, if supply is lower than demand, prices go up. This is a pretty simple explanation for the high house prices you’ll find in Toronto.
The city is surrounded by a greenbelt, which is an area where construction is prohibited. This means there’s a lack of land for new housing developments, so firms can only work with existing space. And, if these houses are occupied, there’s not really much that can be done.
Changing populations have major impacts on house prices. This is particularly evident in the Toronto house market for 2 factors: an aging population and immigration. Both contribute to supply issues because there are simply more people than expected.
While immigration is an overall good thing for local economies, the speed at which people enter the country is vastly different than population growth from local births. In the second quarter of 2022, Ontario registered 126,000 immigrants, the highest number ever. Obviously, these people need somewhere to live.
Then there’s the aging local population. As people live longer, they need somewhere to stay. Traditionally, this would be with family or in retirement communities. However, the recent phenomenon of “aging in place” has led to people staying where they are. The more this happens, the fewer houses are reentering the Toronto real estate market.
Real Estate Investment
Real estate has long been seen as a relatively secure financial investment. A 2018 survey found that nearly 38% of properties in Toronto weren’t occupied by their owners. This means they’re rentals of some kind.
Another obvious issue is sites like Airbnb. Short-term rentals take properties off the market for long-term users. In a single year, Airbnb rental listings increased by 83% on average, but went up as much as 257% for Airbnb-friendly buildings.
The bottom line is that this has an impact on home price Canada and for rent home in Toronto. It feeds into the issue of supply, as owners can make far more money with Airbnb than they could by renting to someone living long-term.
Where is the Toronto Real Estate Market Headed?
As is evident in the price stats given above, the Toronto house market is gradually declining. Whether this is a good thing really depends on which side you’re on. For buyers, it potentially means the ability to buy a property for less. But if you’re a seller, it could mean missing out the amount of money you expect to get for a home.
If you’re in Toronto buying house, there’s currently a lot of uncertainty about purchasing power. Global inflation has had a big impact, and affordability is fairly low at the moment.
But what could this actually mean for 2023? It could mean that home price Canada will slump or, at worst, crash. It’s unlikely this’ll happen, though, as a housing crash is a major economic event and we haven’t quite reached that point yet.
A more likely scenario is that people who bought in 2021 will experience negative equity. In short, this means they make a loss on their home, whether short- or long-term. For example, if you bought a house for $1 million and it gets valued at $900,000 the following year, you’ve effectively lost 10% of its value. Whether this happens will ultimately depend on the Toronto real estate market trends in 2023.
Of course, this is fairly easy to avoid by not selling a property at a negative. However, some sellers might not have much of a choice. In theory, decreasing property prices will make people more willing to buy but others less willing to sell. If this happens, not much could actually change in the Toronto house market.
How Can Buyers Prepare for the 2023 Toronto Real Estate Market?
For those in Toronto buying house in 2023, it’s possible to get into a good position and take advantage of the downward trend. You could do the following:
· Contact a Toronto real estate lawyer. Speak to a lawyer to understand your position in the market and what kind of power you’ll have as a buyer. It’ll also help you to understand trends and laws that’ll work in your favor.
· Similarly, get in touch with a real estate agent to get the latest market news. If you establish a relationship early, you might even get notified of fresh properties.
· Get preapproved for a mortgage. This is an obvious one, but if you’ve got your mortgage preapproval in place, you know how much you can borrow and you’ll be in a better position when you find a home.
If you’re going to get really serious about the Toronto real estate market, you should consider getting a second phone number. Doing so will mean you can keep all your communication in one place and keep your personal number private. Better yet, you could ensure you have a Toronto area code phone number if you don’t already. You can do all this, and much more, in the Textr app.
How Can Real Estate Agents and Lawyers Prepare?
As a real estate agent represents the seller, 2023 might not be the best year for them. The same is true for a Toronto real estate lawyer too, although they’ll still be able to make money regardless of the house price.
Even so, now is the time to get prepared by streamlining business communications. For example, you should set up a professional business phone system to build a better company image and to ensure no messages are missed.
Also, get multiple local area code numbers to manage your branches easier. You can get an area code of Toronto on a VoIP service, meaning all your communications will look professional and be easy to manage.
Using a VoIP service, you can also assign individual phone numbers to employees. This allows everyone to see company-wide contacts and receive calls. Setting up this kind of system for a real estate agent company ensures you won’t miss any messages and can take advantage of any lead that comes your way.
Get Better VoIP Service with Textr
Textr Team is a lightweight business phone system for SMBs and self-employee agents. It’s specifically designed to make communication and collaboration easier, whether this is with other employees, customers, or both.
You can look up and manage phone numbers from a single app, and sync data across mobile and desktop. This means having all the information you need wherever you need it, even across multiple sites and devices.
There’s also support for multilingual operating systems, which is ideal for working with different teams across the real estate pipeline. Textr Team is designed to simple and efficient, no matter the type of business you’re running.
And make sure you download the Textr Team app to see how much easier it can make your business communications. It’s available on Android, iOS, and for web browsers.
About the Writer
B2B marketing specialist with expertise in lead generation through text messaging. Unlock your business potential with his proven strategies.