TORONTO — The Greater Toronto Area real estate market saw home sales and prices barely change between July and August, but the head of the region’s housing commission expects more volatility to come.
The Toronto Regional Real Estate Board revealed Wednesday that last month saw 5,294 sales, nearly one per cent more than July sales. However, August sales represent a 5.2 percent drop from the previous year.
Added to this is an average home price of $1,082,496, down 3 per cent from July and up 0.3 per cent from last August.
These numbers reflect higher borrowing costs and uncertainty about the economy and Bank of Canada decisions, which have led to ten interest rate hikes over the past 18 months. The bank was due to make a new announcement on its interest rates on Wednesday morning.
The rapid succession of rate hikes has so far caused many potential buyers to put their buying plans on hold and sellers to wait until buyers are once again more confident in their borrowing power.
“Looking forward, we know there will be strong demand for housing – both owned and rented – in the Greater Toronto Area and the Greater Golden Horseshoe. Record immigration levels alone will be enough to ensure this,” Paul Baron, chairman of the board, said in a press release.
“In the near term, we will likely continue to see some volatility in house sales and prices as buyers and sellers wait for more certainty on the direction of borrowing costs and the economy as a whole. together.”
Jason Mercer, the council’s chief market a**lyst, found that the bulls have so far played a big role in how conditions in the region have changed from season to season.
“More balanced market conditions this summer compared to the tighter spring market caused selling prices to hold at last year’s levels and decline slightly from July,” Mercer said.
“As interest rates continued to rise in May, after a pause in the winter and early spring, many buyers had to adjust their offers in order to qualify for higher monthly payments. Not all sellers chose to accept selling prices below expectations, which leads to lower sales.
The average price of a detached home in the Greater Toronto Area rose nearly 3 per cent to more than $1.4 million in August year-over-year, while semi-detached properties rose nearly 7 percent to just over $1 million.
Over the same period, the average townhouse price rose just under 4 per cent to $935,800, while the average condominium apartment price fell about 1 per cent to $705,572.
On the sales side, single-detached home sales were down 12 per cent in August from a year earlier. Semi-detached sales fell 14.4 per cent, but condominium apartment sales rose 7.6 per cent and townhouse sales rose 0.6 per cent.
Amid these changes and a looming recession, Desjardins economists Jimmy Jean and Marc Desormeaux have noticed that many potential home buyers in Toronto sense an opening.
“But even under the bleakest economic scenarios, we don’t foresee a return to affordability in Canada’s largest city anytime soon,” they said in a report released Tuesday.
Their research involved a**lyzing three scenarios that Toronto might face.
The first, a severe recession similar to that seen in the 1990s, would see the average home value in Toronto drop by $185,000, or 16 per cent below current levels, by the end of next year. they predict. By 2025, prices would fall by $340,000, or 30% less than in July 2023, according to their modelling.
In the second scenario, where a mild recession occurs, housing prices in Toronto could bottom out by the end of next year at around 5 per cent below July 2023 levels.
In the third scenario, where new listings are low and population growth strong, house prices would rise above the February 2022 peak in early 2025.
“While this would be great news for owners, it’s the least positive of our scenarios for potential buyers,” they point out.
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