Toronto Star ePaper

Housing market slide continues

Prices down as GTA home sales plunge by 41% from last year

TESS KALINOWSKI

Toronto-area home prices dropped for a fourth consecutive month in June as year-over-year real estate sales plunged 41 per cent — similar to the declines seen in the 2008 and 2009 global recession.

It’s usual for sales to fall off in May and June, and last month’s dip is not unprecedented. In April 2020, sales tumbled 67 per cent in the midst of the first COVID-19 lockdown.

But it is an indication that interest rate growth has issued a dramatic shock to the market, said Toronto Regional Real Estate Board (TRREB) chief market analyst Jason Mercer.

“Obviously right now we’re dealing with a pretty substantial and quick uptick in borrowing costs,” he said.

Although house and condo prices continued to rise, up by 5.3 per cent on a year-over-year basis, the surging prices in the detached and semidetached housing categories appear to have ended. Lower-priced properties were responsible for most of June’s price gain, said the real estate board on Wednesday.

Detached house prices — which climbed by up to 40 per cent annually during the pandemic — rose by only 3.5 per cent annually across the GTA to an average of $1.45 million in June. That compares to an annual increase of 9.3 per cent to $747,216 for condos.

The average selling price for all houses and condos in June was $1.15 million, down from the February market peak of $1.33 million and the May average of $1.21 million.

Recent rate hikes and the spectre of higher borrowing costs in the near future have affected both price-conscious, first-time buyers and homeowners thinking about listing, said real estate board president Kevin Crigger.

“Home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect wherein homebuyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up,” he said.

Crigger said sales will likely remain slow through the summer. But once consumers see prices stabilize, some buyers will jump in again.

Fears of a recession have increased despite high employment — considered a good predictor of housing sales — and economic growth, and that could be playing a role in home-buying and selling decisions, said Mercer.

But there is still room for the housing market to tighten if listings decline. “With the unemployment rate low, the majority of households aren’t in a position where they need to sell their home. If would-be sellers decide to take a wait-and-see attitude over the next few months, it’s possible that active listings could trend lower as well. This could cause market conditions to tighten somewhat, providing some support for home prices,” said Mercer.

Despite the softer housing market, it’s important that government and industry continue to increase the supply of homes in the GTA, he said. The rental market has tightened up considerably in recent months as would-be buyers step onto the sidelines.

FRONT PAGE

en-ca

2022-07-06T07:00:00.0000000Z

2022-07-06T07:00:00.0000000Z

https://torontostar.pressreader.com/article/281642488875563

Toronto Star Newspapers Limited