The Greater Toronto Area housing market saw little fluctuation in home sales and prices between July and August, but the head of the regional housing authority expects further volatility.
The Toronto Regional Real Estate Board said Wednesday there were 5,294 sales last month, up nearly one per cent from sales in July. However, sales in August were down 5.2 percent year-on-year.
That compares to an average home price of $1,082,496, down three percent from July and up 0.3 percent from last August.
The numbers reflect higher borrowing costs and uncertainty about the economy and the Bank of Canada’s decision-making, which has led to 10 interest rate hikes in the last 18 months. The bank was due to make another interest rate announcement on Wednesday morning.
The rapid succession of interest rate hikes has so far caused many would-be homebuyers to pause their purchasing plans and caused sellers to hold off listing their properties for sale until buyers have more confidence in their creditworthiness.
“Looking forward, we know there will be robust demand for housing – both owned and rental – in the Greater Toronto Area and the broader Golden Horseshoe area. Record immigration numbers alone will ensure this,” Paul Baron, the panel’s president, said in a press release.
“In the short term, we are likely to continue to experience some volatility in sales and property prices as buyers and sellers await more certainty about the direction of borrowing costs and the overall economy.”
Jason Mercer, the board’s senior market analyst, noted that the increases so far have had a big impact on how conditions in the region have changed from season to season.
“More balanced market conditions this summer compared to the tighter spring market resulted in sales prices remaining on par with last year and down slightly compared to July,” Mercer said.
“As interest rates continued to rise in May after a lull in the winter and early spring, many buyers had to adjust their offers to qualify for higher monthly payments. Not all sellers chose to charge lower than expected sales prices, which resulted in fewer sales.”
The average price of a single-family home in the Greater Toronto Area rose nearly three per cent year-over-year in August to more than $1.4 million, while semi-detached homes rose nearly seven per cent to just over $1 million.
During the same period, the average price of townhouses rose nearly four percent to $935,800, while average condo prices fell about one percent to $705,572.
On the sales side, 12 percent fewer single-family homes were sold in August compared to the previous year. Semi-detached house sales fell 14.4 percent, but condo sales rose 7.6 percent and townhouse sales rose 0.6 percent.
Amid these changes and a predicted recession, Desjardins economists Jimmy Jean and Marc Desormeaux found that many potential home buyers in Toronto sense an opening.
“But even under the worst economic scenarios, we don’t see a return of affordability in Canada’s largest city any time soon,” said a report released Tuesday.
Their research included analyzing three scenarios Toronto could face.
The first, a severe recession similar to that of the 1990s, would reduce average property values in Toronto by $185,000, or 16 per cent, below current levels by the end of next year, they predicted. By 2025, according to their modeling, prices would fall $340,000, or 30 percent lower than in July 2023.
In the second scenario, where there is a moderate recession, Toronto home prices could bottom out by the end of next year and be about five per cent below July 2023 levels.
In the third scenario, where new registrations are weak and the population is growing rapidly, house prices would exceed the February 2022 peak in early 2025.
“While this would be good news for property owners, it is the least positive of our scenarios for potential buyers,” they point out.
https://torontosun.com/news/local-news/toronto-home-sales-little-changed-from-july-to-august-but-expect-volatility-trreb Toronto home sales are little changed, but volatility is expected: TRREB