Toronto area prices drop 4.5% in July as real estate enters a balanced market

July’s home price is the lowest since January, when the average price went below $1 million for the first time since 2021. 

“Many would-be homebuyers are waiting for confidence in the market and broader economy to improve before making a purchase. This includes more clarity on tariffs, inflation and borrowing costs,” said TRREB president Daniel Steinfeld in the report.

Since the February 2022 peak, the average GTA sales price has dropped by almost 24 per cent.

The report noted that resale housing market conditions tightened in July compared the same month a year earlier. Even though home sales edged slightly lower over that period (by 0.9 per cent) new listings were down substantially (by 17.8 per cent).

“This suggests that active homebuyers faced more competition from other potential purchasers. If this trend continues, average selling prices could level off in the second half of this year,” the report said.

The sales-to-new-listing ratio was 41 per cent indicating a balanced market, where neither buyers nor sellers have greater negotiating power. 

There were 5,995 sales in July, below the 10-year average of 7,722. However sales were up month-over-month by more than three per cent. 

The drop in new listings is likely from sellers not being able to achieve the desired price for their property, said Jason Mercer, TRREB’s chief information officer.

“When sellers are not seeing the pricing they wanted materialize, or other terms they’d come to expect, you start to see listings fall off, which leads to support for pricing,” he said, adding that once pricing increases it can boost sales and new listings. 

While it can’t be known if prices have hit bottom, the market is showing signs of sustained support for price growth month over month in the second half of the year, he said. 

In the GTA, sales were down the most for semi-detached homes at almost 6 per cent year over year, followed by sales of townhomes dropping by 2.7 per cent, detached by 0.6 per cent and condos by 0.1 per cent. 

Prices were down for all property types in the GTA, with semi-detached seeing the greatest price decline at 7.4 per cent year over year (with an almost 10 per cent drop in the city of Toronto), followed by detached at 5 per cent, townhomes at 3.9 per cent, and condos at 2.3 per cent.

Semi-detached homes likely saw a big drop in pricing due to the mix of price ranges, with fewer high-end properties selling this year compared to last, Mercer said.

Meanwhile, condos have seen prices and sales remain flat year over year as first-time homebuyers are entering the market as borrowing costs and condo prices have dropped significantly over the last couple of years, he added. 

To get more buyers and sellers participating in the fall market, Mercer said there needs to be certainty on trade with the U.S. and stability on the Iran and U.S. conflict, which has pushed up inflation and interest rates on fixed-rate mortgages since the war broke out.

“If both of those things can be achieved we could see a boost in sales leading us into 2027,” he said.