Toronto’s Real Estate Sales Are Plunging..But What About Prices?

The Toronto Regional Real Estate Board (TRREB) MLS ® System reports that in July 2022, there were 4,912 home sales reported. This number is down by 47 percent compared to July 2021 and 24 percent compared to June 2022.

TRREB explains that sales volumes and new listings of Toronto’s real estate properties are down. It is expected that the trend for new listings will continue to follow this declining trend for sales as we move through the second half of 2022 and into 2023.

Despite this plunge in sales, the Canadian housing market is seen as more balanced this July 2022 compared to last year. Another result is that price growth in real estate properties is moderated. Despite the decline in sales, it is seen that the average selling price increased by 1.2 percent compared to July 2021.

It is observed that residential real estate types that are more affordable experienced substantial price growth of six to seven percent. Real estate properties under this type include condominium units, apartments, and townhouses because more buyers opted to invest in these segments to mitigate the impact of higher borrowing costs. Prices of semi-detached houses also increased by five percent compared to July 2021. However, detached home prices dropped down to three percent.

The price hike in Canada's housing market, especially in the affordable sector, has encouraged property buyers to rethink their housing intentions. Some buyers are thinking of waiting for further drops in the prices to make the most of their hard-earned money. On the other end, sellers are considering if they should hold on to their property and wait until the housing market shifts in their favour or sell their property while prices are still experiencing price increases. Some sellers are terminating their listings to take advantage of the growing rental demand in the Canadian housing market to increase the rental costs further.

The present condition of Canada’s housing market shows that real estate prices are not following the plunge in home sales or listings.

The TRREB is now encouraging the federal government to make a rapid intervention in boosting housing supply and controlling the increase of mortgage rates and other challenges to Toronto real estate housing affordability. Boosting the supply of housing developments is key in accommodating the long-term population growth in Toronto.

The Royal Bank of Canada’s (RBC) chief economists mentioned in their prediction last July 2022 that “the economic landscape is rapidly becoming less hospitable for Canada’s housing market” due to the increasing interest rates and unstoppable inflation. As a result, they, along with other major banks, feel that a further increase in mortgage lending rates will prevent potential buyers from buying their homes in Canada.