Toronto-area condo prices hit their lowest level in more than four years in July, while overall real estate sales saw its best July since 2021, according to a new report from Toronto Regional Real Estate Board (TRREB).
Overall the average sales price dropped 5.5 per cent in July compared with the same month last year — bringing the price to $1.05 million — with condos seeing the biggest decline at 9.3 per cent. This brought the average price for a GTA condo to $651,000 — the lowest price since February 2021, when the average selling price was $642,000.
In February 2020, before lockdowns took effect, the average price for a condo was $666,000.
The average sales price for all property types has dropped by more than 21 per cent in the GTA since the February 2022 price peak.
“The condo market segment has seen real growth in inventory over the last year or so, and sales have not kept up,” said Jason Mercer, TRREB’s chief market analyst.
“That market often sees a lot of first time homebuyer activity and that is the most interest-rate sensitive group.”
While there has been an improvement in affordability as interest rates have dropped over the last year, many potential first-time buyers want larger units instead of the studio and one-bedroom apartments that have flooded the market due to investors who have fled as they can no longer cover their mortgage costs.
The new-condo market is also bringing a record number of new supply due to the high number of condo presales at the height of the pandemic when interest rates were ultralow.
While sales improved for all property types year-over-year, prices continued to drop in July.
Townhomes saw a price decline of 7.4 per cent year-over-year, followed by detached homes at a 5.1 per cent decline, and semi-detached at a 2.3 per cent drop.
But sales for all property types increased year-over-year with semi-detached sales surging 25.5 per cent, followed by detached homes at 11.3 per cent, townhomes at 7.9 per cent, and condos at 5.8 per cent.
Sales have been depressed for some time, but now there’s a segment of buyers that are finding conditions in the market more favourable, Mercer said.
“It takes a while for interest-rate drops and more affordable borrowing costs to signal its way through the market,” he said, “but now there’s an increasing number of people who are finding the situation more affordable.”
However, the total number of listings is up in July by 26 per cent year-over-year — even though sales increased there’s still plenty of inventory for buyers to sift through, Mercer said.
If priced right and in a desirable neighbourhood, there will still be interest and potential biddings wars for the property, but overall buyers have much more negotiating power when putting in an offer.
“We’d need to the see a number of months where sales growth outstrips new listings, to bring down the active listings in the market,” Mercer said. “At that point then we’d see some upward pressure on pricing.”
The Bank of Canada has held its key interest rate again in July at 2.75 per cent.
Mercer said if the central bank lowers the rate a couple more times before the end of the year it can help potential buyers enter the market.
