Is the Market Starting to Bottom Out?

November 22, 2022

Key points:

  • Month-over-month sales and housing prices have shown recent increases. While it’s too soon to say for certain, this could be a sign of the market starting to bottom out.
  • Both buyers and sellers are waiting the market out. When interest rates start to go back down, we should see both sales and prices in the Toronto market accelerate.

When will the market bottom out in Toronto?

In this video, I discuss the recent trends in the Toronto real estate market, and what it means for buyers and sellers. Some of the latest numbers are suggesting the market is reaching an inflection point. Here’s what that means.

Don’t feel like watching? Find the full transcript below!

Chris: [00:00:00] Being a home buyer right now is particularly challenging. I mean, on the one side, it should be easier to get into the market because home prices are coming down. That’s no secret. But on the flip side, you have rising interest rates to keep you up at night. And due to those rising rates, what we qualify for as a mortgage amount is reducing. And then on top of all of that is that sellers don’t want to sell. There’s almost no inventory available. So if you are a first time home buyer or in the market to buy real estate in Toronto, the question on everybody’s mind right now is when will the market bottom out, and when should you take that chance and get aggressive in putting in an offer? And in this video, I want to discuss some of the latest real estate numbers that might suggest that we are getting close to a bottom or inflection point.

Both buyers and sellers are waiting out the market

Chris: [00:00:51] So first, let’s talk about the current market, where we are right now. The market at best right now can be characterized as an epic standoff between buyers and sellers. On the one side, you have sellers who are being very stingy and very picky about listing their properties. You don’t see a lot of inventory coming online, and that’s because sellers are trying to wait out the market until prices rise again before listing their properties. So that’s why we have very low inventory. Everybody’s expecting the prices that their neighbours sold for six or nine months ago. So there’s a big hold off on the seller side. And buyers are equally not in a rush because buyers are watching the market. They’re seeing that month over month there have been price declines. And why would you rush to buy a property today when tomorrow the price of that property might be lower?

Chris: [00:01:48] If you’re a buyer in particular, you want to pay attention to this because you want to time things out. If you’re waiting for prices to get lower, you want to time it when the market is lowest and we have to look at data to inform us. It’s the best tool we have looking at past data to inform where we might be headed. And with the most recent Canadian and Toronto based real estate numbers, we are starting to see some changes in the market that might suggest that things are starting to bottom out and flatline a little bit.

Sales volume and housing prices are starting to increase

Chris: [00:02:21] So in particular, there are two things that I think are interesting in the October data that are worth pointing out. The first is that the number of homes sold month over month is starting to increase nationally across Canada. For the first time since the rise in interest rates, we’ve seen a month over month increase in the volume of sales. Now we’re still down significantly since the peak in February. I think the latest number is we’re down about 40% in terms of volume. But those were also extraordinary numbers to begin with. So as we’re seeing the volume of sales increase, that could be a sign that the market is growing in confidence and both buyers and sellers are participating more and agreeing on a price level.

Chris: [00:03:14] The second important piece of information are prices. Here in the GTA, we have seen now three consecutive month of month over month increases to home prices. Prices seem to bottom out in August, but since then, month over month we have seen price increases on average. That’s not right across the GTA. It’s very geographical. We also have to keep in mind the housing type is a detached condo 905-416. But on aggregate we are seeing the average numbers start to move back up again.

Is the Bank of Canada reaching the end of this rate hike cycle?

Chris: [00:03:52] Now, I think it’s way too early to say with any degree of certainty that the market has changed and now things are going to start heating up indefinitely and we’re going to get back to the good old days. But seeing this change, these inflection points in the graphs and in the data suggests that we might be getting close to a bottom. And it’ll be interesting to see over the months to come how the evolution of rising interest rates in particular are going to influence both buyers and sellers and the decisions that they make.

Chris: [00:04:26] Chief market analyst at the Toronto Real Estate Board, Jason Mercer, wrote in the October report, “Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed rate mortgages may trend lower moving forward, which would help affordability.” Overall, this echoes my sentiment as well. We will start to see real estate really start to heat up when we have established the peak of inflation and therefore interest rates. And once interest rates start to trend back down, which they are expected to do throughout mid 2023 and into the latter half of 2023, expect to see volume in Toronto sales and prices to accelerate as affordability improves.

Need more help or information?

Chris: [00:05:33] My name is Christopher Molder. I am a Toronto-based mortgage broker. If you are curious and trying to time out the market and want to make sure that you’re in the best position to strike while the timing is right, I encourage you to reach out, to get prequalified, pre-approved, to have a conversation about your unique circumstances and how you can take advantage of this market. I’m just a phone call or an email away. Until next time. Bye for now.

If you’d like to discuss the market starting to bottom out, and how it relates to your mortgage, you can contact me here or schedule a convenient call time directly into my calendar below.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.