Greater Toronto real estate didn’t get a boost from the race cut cycle that kicked off last month, as the industry hoped. TRREB data shows home prices dropped further as June sales printed the lowest level in decades. Condo demand has become so weak that one bank warned investors that frustrated sellers are canceling listings at a record pace.
Greater Toronto real estate prices slipped a little further from last year. The benchmark price of a home across the region was $1.11 million in June, down 4.6% from last year. Homes in the City of Toronto took a bigger hit, falling 5.1% over the same period to $1.15 million. Both measures show larger declines for annual growth than the previous month, indicating the loss trend is accelerating.
Even more noteworthy was how soft home sales have become in Greater Toronto. The board reported just 6,213 existing homes sold in June, down 16.4% from last year. That makes it the weakest June demand for existing homes in Greater Toronto since 2000. For those that need a reminder, that was 24 years ago—a whole generation hasn’t seen sales this slow. Before iPhone or YouTube. A tiny company called Google was just getting ready to become the default search provider for Yahoo! It was a looong time ago.
At the same time, inventory is heading in the opposite direction. New listings climbed 12.3% over the past year to 17,964 units in June. Even the board acknowledged the sudden rise of supply in a region where it has been notoriously scarce.
“The GTA housing market is currently well-supplied. Recent home buyers have benefitted from substantial choice and therefore negotiating power on price,” explained Jason Mercer, the chief analyst at TRREB.
Greater Toronto real estate has been generally weak, but single-family homes are faring better than condos. The condo segment has turned so weak that even financial institutions are sending warnings to investors.
“The story of the Toronto real estate market is very different, depending on the property segment,” said Daren King, an economist at National Bank of Canada (NBF).
In a research letter to investors, he notes a significant, double-digit decline in the volume of seasonally adjusted condo sales from a month prior. Seasonally adjusted volumes don’t mean much in the context of the skewed seasonal patterns real estate has followed post-2020, but it did reveal an odd data point that would normally slip under the radar.
“On the [condo] supply side, active listings decreased by 1.6% despite a 3.5% [monthly] increase in new listings, as we estimate that a record number of sellers canceled their listings during the month,” explained King.
Canceled listings provide context to the greater weakness of demand in the current environment, beyond raw inventory. Sellers unable to unload their properties are becoming so frustrated they’re pulling their listings, obfuscating that demand is weaker than typical data points reveal.
The industry had expected things to pick up as rates were cut, especially since population growth is still chugging along. However, the narrative was based largely on a sudden shift in sentiment, since lower mortgage rates were already available before the cuts. Fixed rate mortgages are currently much cheaper than variable term, preventing the overnight rate from providing any material boost to credit availability.
Estimated population growth may be fueling the assumption that buyers will inevitably appear. However, they’re still working against the city’s fundamentals, which include rising rental apartment vacancies, rising office vacancies, and a surging unemployment rate that’s much higher than the national average.
