The Greater Toronto Area's real estate market appears to be balancing out, with sales trending lower as new listings gained steam in July.
The number of home sales that took place in July did still show growth compared to the same time last year, but at a slower rate than has been seen in recent months, according to new data from the Toronto Regional Real Estate Board (TRREB). With a total of 5,250 transactions recorded last month, sales were up 7.8% compared to July 2022. This is significantly smaller than both the 16.5% year-over-year increase seen in June and the even bigger 24.7% annual jump seen in May.
Even on a seasonally adjusted basis, sales trended lower for the second month in a row.
“Home sales continued to be above last year’s levels in July, which suggests that many households have adjusted to higher borrowing costs," said TRREB President Paul Baron. "With that being said, it does appear that the sales momentum that we experienced earlier in the spring has stalled somewhat since the Bank of Canada restarted its rate tightening cycle in June. Compounding the impact of higher rates has been the persistent lack of listings for people to purchase compared to previous years."
The sales slowdown allowed new listing growth to sneak ahead in July, sitting up 11.5% compared to the same time last year. Of the new listings, which totalled 13,712, the majority were located in the 905 regions outside of Toronto, accounting for 8,595 of the for-sale homes.
Despite the sales cool down and listing growth, market conditions were still tight enough to spur another price jump. The MLS Home Price Index Composite benchmark jumped up 1.3% year over year, meanwhile the average selling price was up 4.2% annually to $1,118,374.
Detached homes, townhouses, and condo apartments all saw their average prices go up across the GTA by 9.1%, 7.5% and 11.1%, respectively, but semi-detached homes, interestingly, saw prices dip by 4.9%.
The only other housing type that saw average prices fall was Toronto townhouses, with prices down 12%. A 13.9% increase in 905-area townhouse prices, however, accounted for the overall net gain for the GTA.
Year to date, prices, sales, and new listings are all below where they were at the same point in 2022. TRREB Chief Market Analyst Jason Mercer notes that the continued interest rate hikes seen this year, coupled with the overall economy, has impacted sales in a way that wasn't seen in 2022.
"Over the long term, the demand for ownership housing will remain strong on the back of record population growth," Mercer said. "However, many homebuyers will continue to be on the sidelines in the short term until the direction of monetary policy and the economy becomes clearer."
TRREB CEO John DiMichele pointed to a "misalignment in public policy as it related to housing" as another sore spot.
"The federal government is targeting record levels of immigration for the foreseeable future, but we have seen very little tangible progress in creating more ownership and rental housing to accommodate this growth," DiMichele said. "Population growth is imperative for economic development; however, this growth will be unsustainable if people can’t find an affordable place to live. All three levels of government need to be on the same page to fix this problem."
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