Home prices in Toronto dipped as activity in Canada’s largest city slows from pandemic highs.
Selling Price in Toronto Slipped -2.6% in March
The average price of a Toronto home dipped -2.6% m/m to $1M or C$1.3M in March, according to the Toronto Regional Real Estate Board (TRREB).
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The TRREB also indicated that the number of home sales in Toronto dropped -30% y/y and new listings dropped -12%.
Jason Mercer, the chief market analyst with TRREB, said, “We did experience more balance in the first quarter of 2022 compared to last year. If this trend continues, it is possible that the pace of price growth could moderate as we move through the year.”
Historic Run-Up in Canadian House Prices to be Challenged This Spring Selling Season
For the last two years, house prices in Canada have seen steep increases due to unprecedented demand and limited inventory. In March of this year, the benchmark home price, calculated separately from average home prices, skyrocketed +35% y/y.
This year’s spring selling season is likely to face additional challenges as policy makers have tried to cool demand. Rising interest rates may provide more hurdles for homebuyers already stretched by record prices. The province of Ontario, home to Toronto, raised its tax on foreign home buyers in March. Additionally, the municipal government plans to tax empty homes often owned by foreigners who use them just a few weeks a year.
It is also widely anticipated that the Bank of Canada plus all six of Canada’s major private banks will begin an aggressive effort to quell Canada’s inflation currently raging at three-decade highs. Monetary officials are expected to double the benchmark interest rate at a policy meeting next week, with more increases to follow throughout the year. Sound familiar?
Mercer with TRREB said in an interview on BBN Bloomberg television, “We’re likely to see acceleration in that tightening cycle so obviously that impacts affordability. As borrowing costs increase you often see some households temporarily move to the sidelines.”
Problem Diagnosed by Experts as “Dearth of Supply”
The pace of sales in Toronto fell to 11 days in March 2022 compared to March 2021. Such a frenetic rush to buy, reinforced by the fear of missing out or FOMO, has led many in the real estate industry to “diagnose” real estate’s problem as being a death of supply, not excess demand.
Kevin Crigger, president of the TRREB, said, “We need adequate housing supply and choice. This needs to be the focus of policy makers rather than short-term and ineffective measures to artificially suppress demand.”
Again, sound familiar?
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Thanks to Bloomberg.
