Home prices in Toronto plummet as sales fall 47% from last year

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Home prices and sales in Canada’s most populous city continued to slide as economic uncertainty and rising rates sidelined more potential buyers.

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Home prices in Toronto fell just over 6% in July from the previous month, averaging $1.074 million, according to data from the Toronto Regional Real Estate Board. Despite the month-over-month decline, home prices in the city managed to rise 1% from July 2021.

The number of homes traded fell 47% year-over-year in July and 24% from the previous month, with 4,912 units sold.

Despite the drop in sales, TRREB chief executive John DiMichele said more GTA households are considering buying a home in the future, but aren’t sure where the market is headed. . The board referred to the guidelines established by the Office of the Superintendent of Financial Institutions.

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“Policymakers could help dispel some of this uncertainty,” DiMichele said in a statement accompanying the data. “As rising borrowing costs impact housing markets, TRREB argues that OSFI’s mortgage stress test should be reviewed in the current environment. Consumers looking to renew their existing mortgages with another lender should not face an additional stress test beyond what they would face with their current lender.

DiMichele further argued for a transparent process and stronger rationale surrounding the stress test rules.

TRREB chief market analyst Jason Mercer also warned that policymakers should take into account a growing population and further stimulate housing construction.

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“The population of the Greater Toronto Area (GTA) continues to grow and tight labor market conditions will drive this growth in the future,” Mercer said. “Despite more balanced market conditions resulting from rapidly rising mortgage rates, policymakers must continue to take steps to boost housing supply to accommodate long-term population growth…. With savings high and unemployment still low, homebuyers will eventually face higher borrowing costs. When they do, we want to have a proper supply pipeline in place or market conditions will tighten again.

Toronto follows other markets like Vancouver and Calgary in posting declines in July as the market falters amid the Bank of Canada’s aggressive rate hike path, including an oversized one percentage point hike in July and fears of recession.

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David Larock, mortgage broker and president of Toronto-based Integrated Mortgage Planners Inc., said markets like Toronto tend to be hit harder than areas like Calgary, where sales fell 3% from year-on-year in July, due to the speculative fever the market attracts.

“…Toronto and Vancouver certainly seem to be more affected than places like Calgary, for example,” Larock said in an interview ahead of the July data release in Toronto on Thursday to describe the overall market slowdown. “Certainly the more speculative markets were hit the hardest psychologically by the 1% increase in the (Bank of Canada) and probably just as they expected.”

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