Yahoo Finance Toronto home sales and prices up from last year, but momentum slows
Prices, sales and new listings all moved higher in the Greater Toronto Area real estate market in July, but some market watchers believe rising borrowing costs and a still limited supply of available properties will be a drag going forward.
According to the Toronto Regional Real Estate Board (TRREB), the average selling price increased by 4.2 per cent over last July to reach $1,118,374, while the MLS Home Price Index Composite benchmark was up by 1.3 per cent year over year.
For the month, 5,250 home sales were recorded through TRREB’s MLS System, a 7.8 per cent increase compared to the July 2022. New listings also jumped 11.5 per cent. On a month-over-month basis, however, sales dipped 30 per cent from the 7,464 recorded in June, leading some to worry that the rebound had stalled.
TRREB president Paul Baron said that the housing market’s resilience in the face of higher borrowing costs indicates that many households have adjusted to the new financial landscape. However, the upward sales momentum experienced in the spring appears to have slowed since the Bank of Canada resumed its rate tightening cycle in June.
On a seasonally adjusted basis, sales declined for the second consecutive month, while new listings trended upwards. The seasonally adjusted average selling price decreased slightly, while the MLS HPI Composite benchmark showed a modest increase.
Baron said a persistent lack of listings is posing challenges for potential buyers.
TRREB chief market analyst Jason Mercer said economic uncertainty is spilling over into the market.
“Uncertainty surrounding the direction of borrowing costs, jobs and the overall economy has impacted home sales over the last two months,” Mercer said in the Aug. 3 release. “Over the long term, the demand for ownership housing will remain strong on the back of record population growth. 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.”
Christopher Alexander, the president of Re/Max, voiced concern over the number of sellers who are opting to stay in their current homes due to mounting anxieties about rising interest rates.
“Rates have risen at such a fast pace that it’s given a lot of would-be homebuyers reason for pause,” Alexander said. “Not a lot of people are talking about would-be sellers taking pause as well because they don’t want to lose their low rate. Sure they’ve made a lot of equity gains, but they look at what it’s going to cost them every month if they move and they think, ‘It’s probably better to just stay. I can renovate my home for a lot cheaper than moving.’”
Alexander said the instinct to stay put was compounding the problem of low inventory levels, and that, worryingly, the GTA could continue to face challenges with low transaction volumes and scarce housing inventory until there’s some respite from the rate increases.
Pritesh Parekh, a Toronto realtor with Century 21, pointed out that this summer is the first summer since the pandemic that resembles a normal sales season. However, despite the sense of normalcy, he too believes sellers remain apprehensive about the potential implications of an interest rate increase in Sept. 6, when the Bank of Canada’s next interest rate announcement is scheduled.
“The interest rate announcements and news have become such a huge part of buyers’ and sellers’ decision making on real estate right now,” Parekh said. “I’ve never seen it so strongly impact people’s decisions. There are a lot of factors for people to consider when they’re going to buy, such as life changes, vacations, schooling, whatever it may be. But right now, what I hear constantly is, ‘Well, what about interest rates? Should we (buy/sell) before interest rates go up? Should we wait for the next announcement or should we sell quickly before the next announcement?’”
He believes both buyers and sellers find themselves in a state of considerable uncertainty.
“When there’s that much confusion, the default is to kind of just wait. I think the confusion is what is causing a lot of the lack of inventory and for people to just kind of hold on for the moment,” Parekh said.
• Email: shcampbell@postmedia.com
