May 2022 GTA Real Estate Market Update

By: Sylvia Smith

May 2022 GTA Real Estate Market Update



In May the Greater Toronto Area (GTA) continued to experience an adjustment due to the higher interest rates of borrowing and buyers trying to assess how the increased rates will impact their home buying decision.  We have since February of this year started to experience a softening of the market in several areas across the Greater Toronto Area.  In January and February of 2022, we experienced record low listing inventory, and most homes sold in less than a week in aggressive bidding wars. The record sales that we experienced in January and February just weren't sustainable.

We are currently in a more balanced market.  Where buyers have more listing inventory to pick from and much fewer homes are selling in bidding wars.  In addition, buyers can now protect themselves with financial and inspection conditions.  Homes continue to sell but the sense of urgency that existed during the first two months of the year has subsided and most homes are now taking longer to sell.


Despite slower sales, the market remained tight enough that the average sale price is still higher than what it was last year at this time.  In May 2022 the GTA average sale price was $1,212,806 and in May 2021 it was $1,108,453 so prices are still up 9.4% compared to last year.  But down from the insane price appreciation that we experienced in February 2022 when the average sale price was $1,334,544.  


GTA May 2022 Market Update

GTA May 2022 Real Estate Market Update, Vaughan Real Estate, Toronto Real Estate

Last month new listings were up 0.5% compared to May 2021 and the average sale price was up by 9.4% compared to May 2021 but the average sale price is down from the record set in February 2022.   Homes are now taking longer to sell as buyers slow down their search and hence the number of days to sell is up by 20% compared to 2021.  In addition, the number of homes that sold in May 2022 is down by 38.8% compared to May 2021. 


Will We Experience a Market Crash?


We are hearing a lot of gloom and doom in the media and comments that there may be a market crash.  I do not believe that there will be a real estate market crash as the economic fundamentals are still relatively strong: the unemployment rate is at record low levels, and employers are struggling to attract employees and as a result, are providing incentives to attract new employees and in addition, there will be 1,300,000 new immigrants coming to Canada over the next several years which will continue to place upward pressure on demand and prices.


I believe what we are currently experiencing is a market adjustment or correction.  We are currently in a more balanced market – where buyers can take their time to search for that perfect home and fewer and fewer homes are selling in a bidding war.  For homeowners that may be considering selling – sure they may not get as much for their home now compared to January and February but their next home purchase will also not be as expensive and they do not have to worry about selling and not being able to buy their next home.  Our current balanced market is much healthier and not as emotionally charged for both buyers and sellers.  My advice to sellers is that if they already own a home what happens to the home prices is somewhat irrelevant unless they plan to exit the homeownership market.  If prices are high sellers will sell high but also buy high and if prices are lower yes sure they will get less for their current home but the next home will also cost less – hence my comments about prices being irrelevant for homeowners.


Below is a summary of prices in the 4 GTA municipalities over the past year.  Toronto is the exception as we have seen demand for real estate in the City of Toronto increase as employees return to the city and as a result prices have continued to increase.  Across all other municipalities, prices are higher in May 2022 compared to May 2021.  The media makes it sound like we are experiencing a huge market crash but in actual fact, the January and February sales activity was not sustainable and only resulted due to the record low number of homes for sale compared to the demand. May 2022 prices are still higher than May 2021 and reflect a 9.4% price appreciation which is historically considered to be a very healthy rate of price appreciation.

Average house prices, Peel, York, Durham, Toronto

What to Expect For the Balance of 2022


We are currently experiencing a slow down in sales activity due to two factors increased interest rates and increased inventory of homes that are currently for the sale (which is quite normal in the spring).  Buyers are currently doing two things: trying to assess the impact of increased rates on their home buying ability, and there are also some buyers that are on the sidelines hoping for a market crash.  In addition, as we come out of the pandemic many people have decided to travel after 2 years of restrictions hence buying a home for these buyers may not currently be a priority.


As mentioned earlier the economic fundamentals do not point to a real estate market crash.  If buyers sit on the sidelines for too long they may very quickly realize that the market has bounced back and possibly get further priced out of the market.  I have seen this in 2008/2009 and in 2017/2018 when many buyers informed me that they would wait for the market to crash and by the time they realized that the market wasn’t crashing they were priced out of the market.  My advice is to buy what you can manage and continue to save and build equity rather than paying a landlord's mortgage. 


My projection is that the market will continue to remain slow through the summer months (which is what normally happens) but more so as families may prioritize family vacations after the last two years of restrictions rather than spending the summer months looking for a home.  Once fall comes around I project that the market will start to pick up again.


If you are a first-time buyer it is a good time to get more active in looking for that perfect home.  Make sure that you are pre-approved and that your mortgage broker or financial institution has locked down the interest rate for 90 – 120 days and that you have a comfort level on what your budget is and what you can afford.


Buy and sell your home or recreational property with Sylvia Smith.  She specializes in residential and recreational real estate within the Greater Toronto Area, Parry Sound, and Muskoka.  Whether you are a first-time buyer, an investor or you are looking for a cottage property, Sylvia Smith provides a seamless experience and is committed to making your real estate dreams come true. Combining her passion for real estate, and a tenacity for protecting client interests and providing integrity and client service sets her apart.  Reach out if you have any questions or are thinking of buying and selling.