Toronto home sales plunge 41% amid glut

Ari Altstedter
Bloomberg

 Toronto home prices dropped for a fourth straight month and sales tumbled as rising bor­row­ing costs rap­idly cool demand for prop­er­ties in Canada’s fin­an­cial cap­ital.

The aver­age price of a home in the city fell three per cent in June to $1.14 mil­lion on a sea­son­ally-adjus­ted basis, bring­ing the total decline to more than 11 per cent since Feb­ru­ary, accord­ing to data released Wed­nes­day by the Toronto Regional Real Estate Board.

Fewer than 6,500 homes were sold dur­ing the month, down nearly five per cent from the pre­vi­ous month — and 41 per cent lower than a year ago. The num­ber of homes lis­ted for sale has soared.

This abrupt slide in Toronto’s hous­ing mar­ket has coin­cided with the Bank of Canada embark­ing on one of the most aggress­ive efforts to raise bor­row­ing costs in the insti­tu­tion’s his­tory. To get infla­tion under con­trol, gov­ernor Tiff Macklem has raised the bench­mark rate from 0.25 per cent to 1.5 per cent since March, and traders are bet­ting the cent­ral bank will lift it to 2.25 per cent next week.

“Home sales have been impacted by both the afford­ab­il­ity chal­lenge presen­ted by mort­gage-rate hikes and the psy­cho­lo­gical effect wherein home buy­ers who can afford higher bor­row­ing costs have put their decision on hold to see where home prices end up,” Kevin Crig­ger, the Toronto real estate board pres­id­ent, said in a state­ment accom­pa­ny­ing the data. “Expect cur­rent mar­ket con­di­tions to remain in place dur­ing the slower sum­mer months.”

“Home sales have been impacted by both the afford­ab­il­ity chal­lenge presen­ted by mort­gage-rate hikes and the psy­cho­lo­gical effect wherein home buy­ers who can afford higher bor­row­ing costs have put their decision on hold to see where home prices end up,” Kevin Crig­ger, the Toronto real estate board pres­id­ent, said in a state­ment accom­pa­ny­ing the data. “Expect cur­rent mar­ket con­di­tions to remain in place dur­ing the slower sum­mer months.”

With buy­ers flee­ing the mar­ket while new list­ings con­tinue apace, prop­er­ties are start­ing to pile up.

The num­ber of homes for sale in Toronto soared 43 per cent in June from the same month last year, to more than 16,000, while prop­er­ties are now stay­ing on the mar­ket an aver­age of seven days longer, the report shows.

As the epi­centre of a national hous­ing boom that saw bench­mark prices rise more than 50 per cent in two years, Toronto and its sur­round­ing com­munit­ies have now found them­selves lead­ing on the way down, too.

©2022 Bloomberg

This entry was posted on Wednesday, July 6th, 2022 at 12:00 am and is filed under Real Estate Related. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.