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Toronto home prices dropped in November, the eighth consecutive monthly decline since the Bank of Canada started reducing the supply of cheap credit. But new listings of properties continued to drop, suggesting homeowners are weathering sharp jumps in interest rates and have not been forced to sell their homes.

The home price index was $1,089,800, a 1-per-cent decline from October, according to the Toronto Regional Real Estate Board (TRREB). The index, which excludes sales of extremely expensive homes and is the industry’s preferred measure of home prices, is down 5.5 per cent compared with November of last year.

Activity continued to wane, with higher borrowing costs pricing many prospective buyers out of the market. Fewer of them are able to qualify for a mortgage large enough to afford homes in the Toronto region, the country’s second-most expensive real estate market after Vancouver.

That, in turn, has reduced competition and made homeowners reluctant to put their properties up for sale.

The number of new listings last month was 14.5 per cent below October and 11 per cent below November of last year. That suggests that variable-rate mortgage borrowers have been able to handle the significant rise in interest rates.

“This does suggest that higher borrowing costs have not prompted a spike in listings due to affordability issues,” said Jason Mercer, the board’s chief market analyst, adding that higher wages have helped homeowners deal with the higher borrowing expenses.

The bulk of the variable-rate mortgages in Canada have constant monthly payments, in which a higher share of the monthly payments go toward interest when rates rise.

The fixed payments have delayed a massive jump in monthly payments, even though the Bank of Canada’s overnight lending rate is up 3.5 percentage points this year. At least one major Canadian lender has warned that borrowers will face substantial increases in mortgage payments in the latter half of 2023 and 2024, when large swaths of fixed-rate mortgage holders will have to renew.

TRREB called the rise in borrowing expenses a “short term shock” to the real estate market. It said the federal government’s decision to bolster immigration levels over the next few years will create demand for housing in the Toronto region, the country’s largest job centre and a top destination for immigrants.

The number of home resales in November was down 2.4 per cent from October, after adjusting for seasonal influences. Compared with November of last year, the volume was down 49 per cent.

Home prices started their descent in the March-to-April period, after the Bank of Canada began ratcheting up the cost of borrowing. The central bank is expected to continue to raise interest rates at its next scheduled interest rate announcement on Wednesday.

Some regions with the greatest price increases over 2020 and 2021 continued to record price declines last month. In Durham, east of Toronto, the home price index is off by 23 per cent this year. In Peel, northwest of the city, the index is down 21 per cent.

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