Toronto real estate shows a 22% prices decline

While the central bank raises its key lending rate and makes it obvious that more increases are coming, the red hot housing market in Canada’s biggest city is finally cooling down slightly.

“We can see significant declines in certain areas of more than 20% for single detached houses in the Greater Toronto Area (GTA)” – noted Michael Carney, the director of business development at HouseSigma.

HouseSigma is a website monitoring home prices and market trends. According to its recent data on home price sales during the period from February 1, 2022 to April 19, 2022, there is strong evidence of a pullback in housing prices.

The report says detached houses sold in February were selling for an average price of 12.1% less in April, marking a price decline from $1.65 million to $1.45 million.

Semi-detached houses were down by 13.5% from $1.33 million to $1.15 million, while the largest decline was reported in the segment of townhousesa: by 22.6% from $1.24 million to $960,000.

Condos saw the smallest drop of 6.8% from $740,000 to $690,000.

According to HouseSigma, bidding wars, which have been quite popular earlier, are not as common already and more properties were taken off the market.

“We can see a correction from February, but I would say the fundamentals for the GTA remain very strong,” – noted Carney.

Although no one is saying it’s the beginning of a serious crash, the price declines are significant as more potential buyers now decide to wait.

Next week, TRREB will release its own report on real estate prices, but it says when the BoC raised its overnight rate last month and signaled more increases are coming, it had a cooling effect on the prices.

“In case you look at the previous Bank of Canada rate tightening cycles, you’ll see that as soon as the Bank starts raising rates it leads to lower sales as people reposition themselves in the marketplace,” – said Mercer.

When it comes to housing it’s all about location, so certain areas are showing smaller price declines than others. Now more people return to offices in downtown Toronto, so the prices there have more chances to hold their value.