Condo Sales Drop 28% as Toronto’s Housing Market Cools
The Toronto Regional Real Estate Board (TRREB) has released its June report, revealing a continued decline in the city’s property market despite the Bank of Canada’s recent interest rate reduction. This marks the first rate cut in four years, but it has yet to stimulate buying activity significantly.
Sales across all property types in Toronto and the Greater Toronto Area have decreased, with condominiums experiencing the most dramatic drop of 28% compared to June of the previous year. Townhouses, semi-detached, and detached homes also saw declines of 14%, 11.4%, and 10.6% respectively.
TRREB president Jennifer Pearce noted that while the rate cut provided some relief, most potential buyers are waiting for further reductions before entering the market. An Ipsos poll conducted for TRREB suggests that cumulative rate cuts of at least 100 basis points may be necessary to materially boost home sales.
Prices have also fallen across all housing categories, with semi-detached properties experiencing the largest decrease at 9.3%. The condo sector, typically an entry point for first-time buyers, is particularly struggling. Experts attribute this to over-leveraged investors attempting to sell their properties and a lack of interest from end-users in expensive, small units unsuitable for families.
New listings have increased by 12% year-over-year, creating a well-supplied market. With the slowdown in sales, active listings have surged by 67.4%, with a current sales-to-new-listings ratio of 34.5%. It’s a buyer’s market in Toronto, alright, except people still can’t afford to buy just yet.
TRREB’s chief market analyst, Jason Mercer, expects that as sales increase alongside lower borrowing costs, the high inventory levels will help prevent a rapid increase in selling prices. The board forecasts an average home price of $1.17 million by year-end, just slightly higher than June’s average of $1.16 million.
“Despite a temporary dip in home sales due to high interest rates, we know that strong population growth is driving long-term demand for ownership and rental housing. Ontario has set the goal of 1.5 million more homes on the ground by 2031,” TRREB CEO John DiMichele said, noting that “this is only possible if all levels of government ensure actionable solutions with sustained effort, including continuing to remove red tape, avoiding financial barriers to home construction, and minimizing housing taxes and development charges,”
Information for this story was found via TRREB, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
