Home sales in Toronto and Vancouver plunged in June from last year’s highs and property prices declined further as higher borrowing costs made it harder for would-be buyers to get into the country’s two priciest real estate markets.
In the Toronto region, home resales dropped 41 per cent over June of last year, and were down 4.7 per cent from May on a seasonally adjusted basis, according to the Toronto Regional Real Estate Board (TRREB). In the Vancouver region, resales fell 35 per cent year over year and were 16 per cent lower than May, according to the Real Estate Board of Greater Vancouver.
The home price index, which adjusts for price volatility, fell in both areas. In the Toronto region, the index fell 4.5 per cent to $1,204,900 from May to June, the third consecutive month of declines, with the steepest losses in the city’s suburbs. Since the peak in March, the typical home price across the region is down 9.7 per cent, according to TRREB data. In Halton, a wealthy suburb to the west of the city, the home price index is down 16 per cent from the peak in February.
“Buyers are holding out waiting for a better deal,” said Felicia Jones, a broker with The Jones Group, who has sold homes in the Toronto region for nearly a decade. “But then we have sellers on the other side that haven’t quite shifted their minds. The value of today is not yesterday’s value or the maximum value of three months ago,” she said.
The price of a mortgage has doubled over the past year and is expected to become more expensive when the Bank of Canada raises interest rates yet again to help curb inflation. The jump in the benchmark interest rate from 0.25 per cent to 1.50 per cent over the past four months has slowed real estate activity across the country.
Realtors said that their clients either can’t afford today’s mortgage rates or, if they can afford the higher borrowing costs, they are waiting for home prices to drop further. At the same time, sellers refuse to accept lower prices after observing nearby homes fetching record prices in the first few months of this year.
The Toronto suburbs and less populated cities throughout Ontario had recorded some of the steepest price gains when interest rates were near zero. Those areas are now seeing some of the biggest declines.
Although fewer homeowners put their properties up for sale in June compared with the previous month, homes are taking longer to sell. In Toronto, the number of new listings remained steady month to month. In Vancouver, new listings declined.
TRREB said it expects current market conditions to remain in place during the slower summer months. Its president, Kevin Crigger, expects some buyers to re-enter the market once home prices stop falling.
In the Vancouver area, the home price index fell 2 per cent to $1,235,900 from May to June and was down 2.2 per cent over the past three months, according to the Vancouver board. Semi-detached houses shouldered the biggest price decline.
The typical price of a detached house in the Vancouver area was down 1.7 per cent to $2,058,600 from May to June. Semi-detached houses were down 2.2 per cent to $1,115,600 over the same period and condos fell 1.7 per cent to $766,300.
“Rising interest rates and inflationary concerns are making buyers more cautious in today’s housing market, which is allowing listings to accumulate,” Vancouver board chair Daniel John said in a press release, adding that the decline in home prices was a result of the drop in home-buying activity, not the increase in supply.
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