In one month home prices in the GTA declined by almost five per cent in July as ample new listings and fewer buyers put pressure on sellers to lower their prices on top of a typically quiet summer market.
The average price for all property types dropped to $1.106 million in July — an almost one per cent decrease from the same time last year. On a month-over-month basis, the price fell by 4.7 per cent from June, according to the Toronto Regional Real Estate Board’s (TRREB) report.
“When looking at the non-seasonally-adjusted average selling price there’s always a dip in the summer anyways,” said TRREB market analyst Jason Mercer. “There could be some market conditions involved, as buyers benefit from more choice, and there would be a dip in price regardless as you move through the summer. It’s a recurring seasonal trend.”
On a seasonally adjusted basis the price remained flat.
Prices dropped for all property types with townhomes and semi-detached seeing the greatest price drops at 3.4 per cent and 3.3 per cent, respectively.
While price changes can be market driven, meaning more inventory can impact overall home prices, there’s a greater “mix of different homes” for townhomes and semi-detached, where the quality of the property, its size and location can greatly impact the properties’ home prices month to month based on what’s sold, Mercer said.
Sales were also down by around 13 per cent month-over-month but edged up slightly by 3.3 per cent in July compared to a year ago, indicating the positive impact of the Bank of Canada’s interest rate cuts on the market, the report said. In June and July, the bank made two consecutive 0.25 percentage-point rate cuts, bringing the key interest rate to 4.5 per cent.
“We didn’t see the full impact of the July cut, but the interest rate cuts have certainly helped and will continue on a downward trend in 2024,” Mercer said. “We’ll get a better sense of the market as we move into 2025, where people will stand in terms of affordability. First-time homebuyers are certainly the most sensitive to rate cuts.”
According to an Ipsos poll, Mercer said, homebuyers would need at least a full percentage-point decrease from the Bank of Canada to move back into the market, which economists forecast will happen by the end of the year.
On the supply side, buyers are benefitting from ample choice with the annual growth of new listings at 18.5 per cent, outstripping the number of sales. The sales-to-new listings ratio was 33 per cent indicating a buyer’s market.
“It was encouraging to see an uptick in July sales relative to last year. We may be starting to see a positive impact from the two Bank of Canada rate cuts announced in June and July,” said TRREB president Jennifer Pearce in the report. “Additionally, the cost of borrowing is anticipated to decline further in the coming months. Expect sales to accelerate as buyers benefit from lower monthly mortgage payments.”
Sales were up year-over-year for detached, semi-detached and townhomes at 3.3 per cent, 7.3 per cent, and 8.3 per cent, respectively. Condo sales were down one per cent.
“Buyers have a lot of negotiating power right now. As more buyers take advantage of more affordable mortgage payments in the months ahead, they will benefit from the substantial build-up in inventory,” said Mercer.
“This will initially keep home prices relatively flat. However, as inventory is absorbed, market conditions will tighten in the absence of a large-scale increase in home completions, ultimately leading to a resumption of price growth.”
