Even as 2022 drew to a close, few experts had high hopes for the Greater Toronto Area (GTA) real estate market going into the new year.

A  November report from RE/MAX Canada forecasted prices in the region to plummet by an astronomical $140,000 in 2023, and the following month, Royal LePage projected the aggregate price of a GTA home will decrease two per cent in the fourth quarter of 2023, compared to Q4 2022.

That fourth quarter was already bad enough, with Royal LePage reporting a year-over-year decrease of 4.6 per cent to $1,068,500, and a quarterly decrease of 2.7 per cent, marking the third consecutive quarter of declines on the back of successive interest rate hikes by the Bank of Canada.

The median price of a single-family detached home took a nosedive by 6.7 per cent year-over-year in the fourth quarter of 2022, though it still sits at a sky-high $1,325,900.

The condominium market fared better in Q4 2022, with median prices actually increasing by a modest 2.7 per cent year-over-year to $683,100.

"For the first time in several years, the GTA real estate market showed a return to more normal seasonal trends, with activity levels down heading into the start of winter and the holiday period," said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd.

"Rising interest rates have poured cold water on housing demand in the region, compared to most of 2020 and all of 2021, which were extremely active and recorded exuberant price gains."

In Toronto proper, the aggregate price of a home was slashed by 4.5 per cent year-over-year to $1,086,700 in the fourth quarter of 2022, with single-family home media prices dropping 4 per cent to $1,517,300, and condos falling 4.2 per cent to $681,500.

Yolevski notes that these decreasing prices could have a positive impact in driving sales by attracting buyers who have been wary about the market.

"While home prices in Toronto and the surrounding area have come down from their peak, affordability remains a real challenge for many in Canada's second-most expensive city. Once interest rates stabilize, I believe many buyer hopefuls who have been sitting on the sidelines will return to the market," said Yolevski.

Yolevski also points out factors like record-breaking immigration creating additional demand in the housing market, adding that this stress "will be placed on a region struggling with a chronic shortage of inventory, whether from newcomers themselves or investors looking to take advantage of a boost in rental demand."

According to Yolevski, a record-breaking number of condominium completions is expected in the region this year, which should offset this stress on supply to some degree and give the rental market "a much-needed boost."