What will Toronto’s spring housing market look like? Experts expect a 20% jump in sales — and an increase in supply.

This year’s spring housing market won’t see a surge anything like the spring markets of past years, experts say. But Toronto could see sales increase by 20 per cent, and a record-high number of condo completions will help boost supply.

GTA sales were down by almost 45 per cent in January 2023, compared to the same time last year, and the average sales price was down by more than 16 per cent during the same time period, according to the Toronto Regional Real Estate Board.

Real estate experts forecast a marginal bump in sales and new listings this spring but say the market won’t be as robust. “Homes sales in Toronto and across Ontario haven’t been this low since the 1990s, so from that perspective it’s clear that demand is unnaturally low,” said Ben Rabidoux, founder of Edge Realty Analytics, a real estate data firm. “Sales won’t remain at this level.”

Heading into the spring, he predicts sales will increase by 20 per cent, which is substantial. But unit sales
will still be 30 per cent below the January and February 2022 sales peak. Sales won’t be close to what we’ve had in previous springs,” he said. Typically, there are 10,000 transactions a month in the springtime. So far in February, there have been 5,883 sales of homes and condos in the GTA, he added. “I think we’ll get up to 7,000 in the spring.”

Around 60 per cent of the sales were for properties under $1 million. Of the houses sold over $1 million, around 25 per cent had a basement apartment, he said. It’s a trend he believes will continue long-term.

In addition, a record-high number of new condo completions slated for 2023 will provide greater housing stock. “It will be interesting to know how many investors want to hold on to the condo or sell it. It’s harder for them to cover the mortgage with rentals, which won’t be able to adjust to the higher interest rates,” he said.

Around 32,000 new condo units will be completed this year in the GTA — more than the previous high in 2020, when 22,473 units were completed — as well as 7,740 new purpose-built apartments — the highest in at least three decades, according to an Urbanation report.

If sticky inflation and a tight labour market persists — and the U.S. Federal Reserve continues rate hikes — the Bank of Canada will be pressured to hike the rate another 0.25 per cent at least. Inflation was down to 5.9 per cent in January. The Bank’s inflation target is two per cent.

While the market is adjusting to higher mortgage rates the Bank of Canada is taking a pause on rate hikes for the time being. But it might not be done using its monetary policy this year.