Why has the Toronto real estate market changed so much in April?

If you're scratching your head wondering what the $&*# is going on with the Toronto real estate market right now, you're not alone!

On the one hand we're being given stats about how the market continues to appreciate at astronomical rates.

On the other, we're being told how the market has cooled and is going to keep regressing.

So which of these is right?

The difficult answer is that they are both correct.

We are still seeing many sectors of the market do exceptionally well with high demand and relatively low supply.

This usually pertains to the entry level homes & condos in the areas immediately surrounding Downtown but we are also seeing fairly strong demand for luxury properties in these areas as well.

A fundamental reason for this continued/increased demand is that there are more people looking to live closer to the Downtown core since many are returning to the office for work, prices in the suburban areas have increased substantially over the past 2 years, commute times have risen & gas prices are sky-high.

Despite this, we are still seeing certain sectors of the market transition from being a seller's market to a buyer's market (or at least more balanced than we have seen over the past 18 months).

Initially we saw a surge of inventory as is traditional for the Spring market but the combination of factors below has caused things to deviate drastically & many sellers are not getting the prices they were expecting.

What has caused the market to change so drastically?

There are infinite global & local influences that created this shift in buyer's demand but it essentially comes down to:

• Rising interest rates
• Increasing COVID cases
• Global economic instability from the war in Ukraine & lockdown in China
• Worn out buyers

Rising interest rates always results in lower purchasing power for the majority of buyers in the marketplace with the exception being those who don't need a mortgage.

Whenever there is this kind of financial impact on the market, there is always a period afterwards where things calm down as buyers assess what they can now afford and adjust accordingly.

The rising COVID cases recently have not helped the situation either as we are seeing many people have to self-isolate as a result of catching the virus, thus resulting in fewer showings (potentially listings as well).

Exterior factors like the war in Ukraine & the lockdown in China are creating ripples across the global economy that has created uncertainty for many markets that were just recovering from the COVID lockdowns.

Pair this all with the fact that many home buyers have worn themselves out by trying to make the winter market a spring market & you've got a scenario that looks much more unstable than what we have seen over the past year.

As a result of these changes in buyer demand, we are already seeing a reaction on the seller side.

While there was initially a large influx of inventory at the beginning of Spring, we have seen that taper off in recent weeks as many sellers have become hesitant about putting their property on the market when things are so uncertain.

This could ultimately create market conditions more similar to those seen at the beginning of the year where selection was very minimal for homes or condos & prices rose in reaction.

It's impossible to predict what will happen in the coming months but I'll be sure to keep you posted about any important details so be sure to check back for updates!

Has the recent changes in the market affected your decision to buy or sell?

Let me know in the comments below!

Rylie C.