Widespread Shortage of Homes in GTA Cannot Be Offset by Temporarily Cooling Demand

With Price Correction Largely Behind Us, Home Prices in the GTA Are Expected to End This Year Just 2% Below 2022

Temporarily Cooling Demand Cannot Offset GTA Housing Shortage

While markets have been correcting in recent months, home prices in many regions remain well above their pre-pandemic levels. The GTA’s average sale price was 25.5% higher in December 2022 than in December 2019.

In the fourth quarter of 2022, the median price of a single-family detached home in the Greater Toronto Area decreased 6.7% year-over-year to $1,325,900, while the median price of a condominium increased 2.7% to $683,100 during the same period.

“Canada’s housing market closed out 2022 much as expected,” said Phil Soper, president and CEO of Royal LePage. “Activity levels were down sharply compared to the hypercharged state we experienced during the pandemic, with home prices flattening or showing modest declines. While the red-hot market conditions are behind us, there remains a widespread shortage of homes in Canada that cannot be offset by temporarily cooling demand. Many sidelined buyers are waiting patiently for the bottom to be revealed. Once interest rates stabilize and consumers adapt to their new normal, many of today’s sidelined buyers will be back – sooner than many analysts are predicting.”

Royal LePage 2023 Forecast

Below, you’ll find the main conclusions from the Royal LePage 2023 Market Survey Forecast:

  1. The GTA will see -2% home price appreciation in Q4 2023/Q4 2022.
  2. Q1 2022 saw the last gasp of the pandemic-fueled real estate boom. Factors affecting the beginning of the end of the boom:
    • February 24, 2022 — Russia invaded Ukraine
    • March 2022 — Bank of Canada issued its first interest rate hike in years in an effort to tame soaring inflation
  3. In comparison to Q1 2022 prices, Q1 2023 will show the maximum YoY drop in 2023. Thereafter, the YoY comparisons will moderate until the end of the year, when prices are expected to be essentially flat to Q4 2022.
  4. Q4 2023/Q4 2022 forecast (%): Condominiums to outperform the single-family segment in the GTA as buyers seek entry-level housing and investors chase high rents:
    • Single-family detached: -2.5%
    • Condo: 1%

Housing Market Drivers in Place to Support Mid- And Long-Term Growth


Chronic lack of housing supply coupled with a growing population. Housing supply has not kept up with population growth, resulting in a near-record imbalance. Canada has a housing shortage of some 1.8 million homes.

Immigration/International Students

Historically high immigration and international student study permits. Canada’s population estimate as of Jan 8, 2023, is 39,292,355, with Q4 2021/Q4 2022 population growth up 2.4% in Ontario. Canada plans to welcome almost 1.9M new Permanent Residents between 2022 and 2025. It is estimated that Canada’s population will reach 47.8M in 2043 and 56.5M in 2068.

Canada is the world’s third-leading destination for international students, with 621,565 studying in Canada in 2022. This group plays a vital role in the health of our economy by contributing over $22B annually.

Demographic Demand

Domestic demographic demand: Boomers, Millennials (not foreign investment). Baby Boomers are retiring at a faster rate than historically — 73,000 more retirements in the year ending August 2022 compared to a year earlier, a jump of 32%.

Desire to Own a Home

Canadians value home ownership and look at it as an opportunity to build wealth. 92% of younger Millennials believe owning a home is a good financial investment. 4M Millennials plan to buy in the next 5 years.

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