Ontario Housing Market as of November 2023
The housing market in Ontario experienced several notable shifts in November 2023. Residential sales activity showed a decrease of 8% from the previous year, falling to 10,216 homes sold. This underperformance extends beyond just a one-year comparison, with Ontario home sales activity well below the five-year average and 10-year average for November.
The average home sold price in November 2023 saw a marginal increase of 1% from November 2022, bringing the average house price in Ontario to $833,525. That’s down 3% from last month. In contrast, the year-to-date (YTD) average price came in at $873,284, a 7% decline from the same period in the previous year. Looking at another measure of prices, the benchmark home price for a “typical” home in Ontario was $861,200, down 2% month-over-month and down 0.5% from last year.
Nationally, Canada’s housing market isn’t doing much better as a whole, with the national average price experiencing a modest increase of 2% year-over-year, at $646,134 in November 2023, which is also a 2% monthly decrease.
There was quite a positive upswing in new residential listings, which increased by 13% from November 2022 to 23,355 – the highest number of new listings in over five years for November. Active residential listings also surged, culminating at 44,444 listings, a large gain of 32% from November 2022.
Inventory levels reflected the increase in listings, with months of inventory increasing to 4.4 months, up from 3 months in November 2022. This figure surpasses the long-term November average of 2.6 months, indicating a slowing market as inventory rises.
The sales-to-new-listings ratio (SNLR) in November 2023 was recorded at 44%. This ratio represents a balanced market, which typically has an SNLR of 40% to 60%, and indicates that there is a balanced relationship between buyer demand and seller supply in the housing market. A ratio below 40% indicates more of a buyers’ market, while above 60% suggests a sellers’ market. The SNLR is rising quickly in many major Ontario cities.
Looking at Ontario’s major urban housing markets in terms of annual price change for November 2023, many cities are seeing home prices decline compared to last year. Hamilton’s housing market is seeing prices 1% lower compared to the same month last year, while Mississauga home prices are down 3% year-over-year. InLondon, home prices are down 2% year-over-year. The City of Toronto has seen prices drop 7% monthly, yet remain unchanged year-over-year.
A few urban housing markets in Ontario are still seeing year-over-year increases in average home prices, such as Brampton (+0.3%), Kitchener-Waterloo-Cambridge (+3%), and Ottawa (+2%).
Overall, the Ontario housing market continues to experience a mix of trends and varying levels of activity, with some regions seeing modest growth while others are experiencing declines.
Ontario Housing Market Forecast for 2023
Ontario’s housing market saw a sharp correction in prices in 2022 as Bank of Canada rate hikes brought about rising interest rates, stifling demand. Looking forward, Ontario’s housing market forecast for 2023 depends on a few factors.
A pause in Bank of Canada rate hikes, something that is widely predicted as inflation eases off and as the risk of a recession increases, might even translate into rate cuts this year. Immigration, looking mainly at newcomers and international students, has also been returning to normal levels. More people looking for a home will boost demand. Met with a shortage in housing inventory, a surge in buyers will introduce upward pressure on housing prices.
The federal government banned foreign buyers from buying a home in Canada, starting in 2023. Should interest rates continue to increase, demand will be crippled further.
A look at house price forecasts by Canada’s major banks gives us a look at what they predict Ontario house prices will be in 2023 and 2024.
RBC predicts that Ontario home prices will decrease 13.7% in 2023, and increase 2.9% in 2024. RBC also forecasts that home sales in Ontario will decrease by 13.9% in 2023 and increase by 34.1% in 2024.
TD predicts that Ontario average home prices will fall by 13.3% in 2023 before rising a modest 0.8% in 2024. For Ontario home sales, TD forecasts an 8.1% decrease for 2023 and an 18% increase in 2024.