Toronto’s housing market: Has rebound already peaked?

By
Millicent Wong
-
0
223
financial contribution

  1. property

The market could move into “buyer’s market” territory if sales continue to slow

Published on July 10, 2023 • Last updated 1 day ago • 3 minutes reading time

A A “For Sale” sign is posted outside a home in the Riverdale neighborhood of Toronto. Photo by Evan Buhler/The Canadian Press Files

Has the Toronto real estate market recovery already lost momentum? That’s a question some homeowners may be asking after June sales fell month-on-month while new listings hit their highest level in a year.

This ad has not yet loaded, but your article continues below.

THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive items from Kevin Carmichael, Victoria Wells, Jake Edmiston, Gabriel Friedman and more.
  • Daily content from the Financial Times, the world’s leading global business publication.
  • Unlimited online access to read articles from the Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic copy of the paper edition that you can view, share, and comment on on any device.
  • Daily puzzles including the New York Times crossword.

SUBSCRIBE TO UNLOCK MORE ARTICLES

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive items from Kevin Carmichael, Victoria Wells, Jake Edmiston, Gabriel Friedman and more.
  • Daily content from the Financial Times, the world’s leading global business publication.
  • Unlimited online access to read articles from the Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic copy of the paper edition that you can view, share, and comment on on any device.
  • Daily puzzles including the New York Times crossword.

Register to unlock more articles

Create an account or log in to continue your reading experience.

  • Access items from across Canada with one account.
  • Share your thoughts and join the discussion in the comments.
  • Enjoy additional articles per month.
  • Receive email updates from your favorite authors.

The 17 percent drop in sales from a peak of 9,012 units in May ended a four-month winning streak and coincided with the resumption of rate hikes by the Bank of Canada, which raised its benchmark interest rate by 25 basis points in June, a move that surprised many.

While average and median prices for homes sold fell slightly to $1,182,120 and $1,010,000, respectively, seasonally adjusted data from the Toronto Regional Real Estate Board showed prices held steady month-on-month.

The median price rose 1.6 percent to $1,163,915, while the MLS HPI Composite benchmark rose 2.5 percent to $1,163,200.

With another rate decision imminent on July 12th, the market could be dealt another blow that could put pressure on prices.

By clicking the subscribe button, you consent to receiving the above newsletter from Postmedia Network Inc. You can unsubscribe at any time by clicking the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

This ad has not yet loaded, but your article continues below.

In an email, John Pasalis, president and registered agent at Realosophy, a Toronto real estate brokerage firm, discussed the potential impact of further rate hikes on the market. Pasalis stated, “If additional increases deter more buyers, there’s a chance we’ll see some downward pressure on prices.”

If sales continue to slow, there is a chance for prospective homeowners that the market will shift into the “buyer’s market,” which is defined as the supply of housing that exceeds demand. For some, this is a nebulous concept.

“It’s hard to pinpoint exactly what metric makes something a buyer’s market. But by and large, we’re still in a seller’s market,” Pasalis said in an interview. “There are still several offers. It just cools. It’s just not as competitive as it was a month or two ago…but we’re probably moving in that direction.”

This ad has not yet loaded, but your article continues below.

According to Pasalis, the 6.9 percent decline in seasonally adjusted sales, despite upbeat year-on-year comparisons, suggests a slowdown in the market beyond the usual seasonality or summer months. This indicates a shift in market sentiment.

The Canadian economy can no longer absorb too many rate hikes

Cam Forbes

While Pasalis sees relative stability in the current market conditions, he said the upcoming fall season remains uncertain.

TRREB President Paul Baron also said that uncertainty about interest rates was clouding the market.

“Demand for condominiums is stronger than last year despite higher borrowing costs,” Baron said in TRREB’s monthly market report. “Against this backdrop, home sales last month were impacted by uncertainty about the Bank of Canada’s inflation and interest rate outlook. Additionally, a persistent lack of inventory likely meant that some willing buyers were sidelined because they couldn’t find a home that suited their needs. Put simply, you cannot buy what is not available.”

This ad has not yet loaded, but your article continues below.

Cam Forbes, a broker at RE/MAX Realtron Realty Inc. in the GTA, said he believes the Bank of Canada is running out of room to hike rates.

“The Canadian economy can’t absorb too many rate hikes anymore,” Forbes said. “I think we’re going to see the necessary slowdown and a significant drop in inflation over the next three to six months. And of course when that happens, interest rates can go down, which is helpful for the real estate market.”

  1. none

    An American outpost in the heart of Ontario’s cottage country

  2. real estate market

    Toronto housing market weakens in June

  3. Homes on the south slope of Vancouver.

    Vancouver home prices are rising, but activity is still below the 10-year average

Forbes forecast the housing market to remain balanced for the rest of the year but acknowledged the current turmoil.

“Right now there is a small adjustment to the recent rate hike. And it’s summer. Summer is the slower time in the real estate market – all else being equal,” he said.

• Email: [email protected]

Comments

Postmedia strives to maintain a vibrant but civil discussion forum and encourages all readers to voice their views on our articles. It can take up to an hour for comments to be moderated before they appear on the site. We ask that you keep your comments relevant and respectful. We’ve turned on email notifications – you’ll now receive an email when you get a reply to your comment, there’s an update to a comment thread you follow, or when a user you follow makes a comment. For more information and details on how to customize your email settings, see our Community Guidelines.

Join the conversation