Toronto real estate prices shows the third consecutive monthly decline
Housing prices in Toronto were down for the third month in a row, as growing interest rates changed the situation drastically in a city recently being one of the world’s hottest real estate markets.
According to the latest report by the Toronto Regional Real Estate Board (TRREB), the average home price in Canada’s largest city went down by 3.1% in May to C$1.18 million on a seasonally-adjusted basis. There haven’t been three consecutive months of prices decreases in Toronto since the beginning of 2019.
Now, home prices are almost 9% lower than during their peak seen in February.
Before that, Canada showed some of the fastest home-price gains in the world, with Toronto and smaller areas of Ontario reporting the highest results, as buyers benefitted from low mortgage rates and looked for larger properties to work from home. Now, as the Bank of Canada tries to restrain the inflation that’s shows almost 7% pace, borrowing costs are going up sharply.
Since March, the BoC has raised its key policy rate from 0.25% to 1.5% and warned that we can see even more aggressive hikes in the nearest future. As a result, commercial banks have also raised their variable mortgage rates making some buyers leave the market. Last month, the number of home sales was down by 9.3% from April, also marking the third consecutive month of drops on a seasonally-adjusted basis.
“There is now a psychological aspect where potential buyers tend to wait until the prices reach their bottom,” – Kevin Crigger, TRREB’s president, noted. “This tendency will probably continue through the summer.”
At the same time, sellers are entering the market, with the number of properties listed for sale in Toronto going up by 26% in May compared to a year earlier. Such conditions have allowed the remaining buyers to choose more reasonably, so homes are staying on the market a little bit longer: about 18 days compared to 15 days in May 2021.
Amid the central bank’s rate increases possibly affecting markets outside Toronto and its suburbs, another report from Vancouver’s real estate board shows price growth seems to have stopped there, as well. Last month, the benchmark home price in Vancouver was down by 0.3% to C$1.26 million, while home sales were below the 10-year average.
TRREB MLS System Sales and Average Prices May 1-31, 2022
| 2022 | 2021 | |||||
| Sales | Average Price | New Listings | Sales | Average Price | New Listings | |
| City of Toronto (“416”) | 2,679 | 1,233,748 | 6,877 | 4,101 | 1,117,457 | 7,052 |
| Rest of GTA (“905”) | 4,604 | 1,200,621 | 11,802 | 7,802 | 1,103,219 | 11,541 |
| GTA | 7,283 | 1,212,806 | 18,679 | 11,903 | 1,108,124 | 18,593 |
TRREB MLS System Sales and Average Price by Home Type May 1-31, 2022
| Sales | Average Price | |||||
| 416 | 905 | Итого | 416 | 905 | Итого | |
| Detached | 816 | 2,552 | 3,366 | 1,914,890 | 1,432,951 | 1,549,498 |
| Yr./Yr. % | -34.8% | -42.6% | -40.9% | 11.5% | 7.8% | 9.5% |
| Semi–Detached | 316 | 436 | 752 | 1,426,273 | 1,044,443 | 1,204,893 |
| Yr./Yr. % | -29.1% | -44.4% | -38.9% | 7.5% | 14.1% | 13.2% |
| Townhouses | 267 | 984 | 1,251 | 1,045,874 | 958,558 | 977,194 |
| Yr./Yr. % | -47.9% | -40.8% | -42.4% | 10.4% | 13.8% | 12.7% |
| Condo Apartment | 1,264 | 584 | 1,848 | 793,124 | 722,778 | 770,894 |
| Yr./Yr. % | -32.5% | -29.5% | -31.6% | 10.5% | 19.7% | 12.9% |