Toronto home sales plunge and prices slide as rising borrowing rates bite
Stephanie Hughes
The Vancouver Sun
Average home price slips to $1.254 million
Toronto home prices slid three per cent in April from the month before.
Toronto home prices slid three per cent on a month-over-month basis and sales slowed significantly in April as rising interest rates started to weigh more heavily on the housing market.
While the average home price of $1.254 million was still up 15 per cent from last year, sales were off 41 per cent from last April and down 27 per cent from the month prior, the Toronto Regional Real Estate Board said Wednesday.
“Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation,” said TRREB president Kevin Crigger in a press release. “Moving forward, it will be interesting to see the balance the Bank of Canada strikes between combatting inflation versus stunting economic growth and related government revenues as we continue to recover from and pay for pandemic-related programs.”
In its fight against the highest inflation rate in decades, the Bank of Canada has so far raised its key rate 75 basis points to one per cent. These rate increases have started to ripple throughout the mortgage market, raising the cost of borrowing.
However, the tight supply of homes is still expected to put some upward pressure on prices compared to last year.
“Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year,” said TRREB chief market analyst Jason Mercer in a release. “However, in line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month.”
Mercer added that he anticipates there should be enough buyer competition to keep price growth strong compared to 2021, though the pace of growth will start to moderate over the next few months.
The supply issue is one that Canada’s leading housing authority is looking at. In the first in a series of reports on the topic, the Canada Mortgage and Housing Corporation this week noted that supply was not keeping up with population growth in Canada’s largest cities, particularly in places like Toronto.
The combination of low supply and steady demand from immigration may be one reason not everyone is seeing a slowdown.
Cailey Heaps, president and chief executive officer at Toronto-based Heaps Estrin Real Estate Team told the Financial Post her team is not seeing as great a shift in the market as is suggested in TRREB’s latest findings.
“This is really incongruent with our experience right now,” Heaps said. “We’re not seeing a slowdown to the extent that … this release would have you think.”
Heaps pointed to regional data from Toronto-based firm Realosophy showing the Toronto area seeing a 14 per cent decline in sales from March to April. She added the figures are being skewed by the surrounding 905 region, though she is still seeing strength in that area too.
“The spring market does feel like it has life still,” Heaps said. “I think it’s being fuelled by lack of inventory and obviously immigration numbers, and the uniqueness of the product that Toronto buyers are looking for keeps them in the marketplace.”
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