Sellers are 'back in the driver's seat' in Toronto's housing market, RBC says

A housing correction that RBC once called ‘historic’ appears to have run its course and sellers are now “back in the driver’s seat in most major markets,” a new report from the bank suggests.

In a report published this week, RBC Senior Economist Robert Hogue said that “spring 2023 increasingly looks like the turnaround point for Canada’s housing market after a year-long slump,” with home sales across Canada rising 11.3 per cent month-over-month in April.

He said that the average benchmark price also increased in about three-quarters of all markets tracked by the bank last month, including in Toronto where prices rose 2.4 per cent to an average of $1.1 million.

Prices were up 5.4 per cent month-over-month in Hamilton and 3.9 per cent in Kitchener-Waterloo.

"Earlier tentative signs of a turnaround in Toronto and Vancouver were confirmed in a big way in April," the report notes. "Home resales jumped 27 per cent and 25 per cent month over month, respectively, rolling back roughly one-quarter of the correction in one go. It appears buyers are quickly regaining confidence in both markets now that the Bank of Canada has paused its aggressive rate hike campaign."

RBC had said as recently as December that the GTA had become a buyer’s market, despite "demand-supply conditions looking reasonably balanced nationwide."

That, however, appears to have changed.

The average price of a Toronto home was still down 7.8 per cent year-over-year in April, according to the latest data from the Toronto Regional Real Estate Board. But prices have now risen in two consecutive months.

"April's widespread vigour is a surprise to us. While we did expect the market to reach its cyclical bottom this spring, we thought it would take a while for the heat to return. Our view was—and remains—that the significant loss of affordability in the past year would keep buyers timid for some time," Hogue wrote.

"First-time buyers, in particular, continue to face major hurdles. Perhaps soaring immigration and a boiling hot rental market are becoming the primary driving forces fueling homebuyer demand. In which case, we could see prices extending April’s gains—possibly materially."

The average price of a Toronto home across all property types peaked at $1,334,062 in February 2022 before dropping to a recent low of $1,037,542 amid an aggressive campaign to push up the cost of borrowing.

The average price of a GTA home in April was up about 11 per cent from the market’s low point ($1,153,269.)