Toronto Real Estate Market Report 2022

Reflecting on Another Pandemic Year in Toronto Real Estate

Another pandemic year has passed with the same uncertainty and frustration as before. Our Toronto Real Estate Market Report 2022 indicates that the same persistent pandemic, business disruptions, and an “over-heated” Toronto real estate market defined the year.

This year, more than others, we focused on mediation and conflict resolution. Housing became a major stressor with COVID-related pressure points. Our team stayed focused on supporting our clients and their tenants. We offered guidance through instability and continued to provide perspective on a city and market in constant flux.

Record-Breaking Home Prices and Market Pressures

The average selling price for a Toronto home increased by an astonishing 21.7% this year. Detached low-rise homes rose 30%, and condo apartments climbed 18%.

The conversation on supply and demand again turned to the government’s failure to address low inventory. Canada now has the lowest number of housing units per 1,000 residents among G7 countries. That figure has been falling steadily since 2016.

This month, the sales-to-new listings ratio hit 90% — up 14% from last year. For comparison, a 50% ratio indicates a balanced market, while 60% signals a strong seller’s market.

Early Signs of Market Cooling

Despite strong growth, signs of cooling began to appear. By the end of Q3, price appreciation slowed to its weakest pace in seven months. Building permits and housing starts, which peaked in March, began to decline.

The Bank of Canada also announced plans to enter a period of sustained rate increases, possibly as early as April.

The Impact of Low Interest Rates and Immigration Backlog

Until rate hikes take effect, low interest rates and a backlog of immigration will keep competition high. Buyers with savings and a desire for more space will continue to compete for limited inventory.

If upcoming rate increases remain within reach for the average Toronto family, the cooling effect should be moderate.

Key Risks to Monitor in 2022

However, risks could grow if interest rates rise too sharply. A stronger Omicron wave or ongoing inflation could also intensify the slowdown.

We’ll continue to monitor these three factors closely and provide updates throughout 2022.

Leasing Market Recovery and Trends

Leasing activity continued to recover after the correction that ended in early 2021.

Vacancy absorption improved thanks to a return to in-class learning and better youth employment figures. Service-sector recovery has also played a big role.

Rental transactions rose 15% from last year, and lease rates increased by about 3% on average. Larger units — single-family homes and 2- or 3-bedroom apartments — performed best. Smaller condos and basement apartments faced slower absorption and weaker demand.

Work From Home Is Here to Stay

Since 2020, many professionals have adapted to working from home successfully. According to a PwC survey, 36% want to keep working remotely, while only 10% want to return full-time to the office.

As a result, homes needed to double as workspaces. Those who could move did, increasing turnover in smaller condos and basement apartments. This created a surplus of smaller, less desirable units and pushed lease rates down.

Although leasing has improved in recent quarters, micro-units still lag behind larger apartments in recovery and absorption rates.

Our Strategy

Avoid investing in studio apartments whenever possible. These units often underperform and are difficult to sell during volatile times.

Instead, invest in condos with a den or a second bedroom to offer multifunctional space.

We’ve also seen higher demand for multi-residential properties. Tenants prefer larger, brighter spaces in low-rise rentals, especially those with access to outdoor areas.

Location Is More Important Than Ever

Spending more time at home has redefined what we value in a community. Convenience and comfort now play a key role in lifestyle decisions.

Living close to grocery stores, schools, and other daily needs adds significant value — ideally within 15 minutes without needing a car.

You Might be Interested: The Faded Appeal of Parking in New Developments

Our Strategy

When investing, focus on proximity to transit, retail, and workplaces. The further you move from the downtown core, the more volatility increases. Properties near key amenities tend to retain value during market shifts.

Single-Family Rental Housing as a Long-Term Strategy

Property prices across the GTA have reached levels that make ownership unattainable for many families.

Strong immigration is also fueling a growing renter population — often families seeking long-term stability before buying a home.

This shift has created a new segment of lifelong renters who value consistency and long leases.

Our Strategy

Many of our clients have found success by purchasing homes with a long-term view. Buying early in a desirable community allows them to benefit from appreciation over five to ten years.

To protect that investment, evaluate the property carefully and choose areas with steady growth potential.

Evolving Real Estate Practices

Tight supply and high demand don’t tell the whole story of Toronto’s price growth. Realtor practices, such as blind bidding, have also played a role.

In today’s market, most listings are priced to spark competition. Buyers submit offers without knowing what others have bid, often leading to inflated sale prices.

Two decades ago, buyers would gather to present offers openly. Negotiations were transparent, and true market value emerged naturally.

Our Strategy

The federal government has hinted at reviewing real estate transaction practices, which could bring major change.

For now, our approach remains the same: we stay fully involved in each transaction and guide clients through every decision.

We analyze property values, trends, and risks to ensure each purchase is strategic — not emotional.

In recent years, many Realtors have moved away from negotiation, allowing sale prices to drift from real value. We welcome the return of transparent, informed deal-making.