Toronto Home Prices Dip in July 2024 as More Homes Hit the Market
In July, the Greater Toronto Area (GTA) witnessed a noticeable drop in home prices, nearly 5% lower than the previous month. This decline comes as a result of a surge in new listings and a decrease in buyer activity, encouraging sellers to reduce their prices during the usually slow summer months.
The average cost for all types of properties fell to $1.106 million in July, marking a slight decline of nearly 1% compared to last year. From June to July, prices dipped by 4.7%, as noted by the Toronto Regional Real Estate Board (TRREB).
Jason Mercer, a market analyst for TRREB, explained, "The non-seasonally-adjusted average selling price typically dips in the summer, but this year, more available options for buyers and market dynamics have accentuated this trend."
Despite these fluctuations, when adjusted for seasonal variations, prices remained stable.
The decrease was consistent across all types of properties, with townhomes and semi-detached homes experiencing the most significant reductions, at 3.4% and 3.3% respectively.
Mercer added that while price changes often reflect market conditions with more available inventory influencing overall prices, the mix of homes sold—varying in quality, size, and location—also plays a crucial role, especially for townhomes and semi-detached houses.
Home sales dropped by approximately 13% from June to July but showed a slight increase of 3.3% over the previous year. This uptick is partially due to the Bank of Canada’s recent interest rate cuts in June and July, which lowered the key rate to 4.5%.
"The July rate cut didn't show its full effect immediately, but ongoing reductions should help continue the downward trend in prices into 2024," Mercer observed. "As we head into 2025, we'll get a clearer picture of where buyers stand in terms of affordability, with first-time buyers being particularly responsive to these changes."
An Ipsos poll cited by Mercer suggests that a significant decrease in interest rates, ideally by a full percentage point, would be necessary to re-energize the market—a scenario some economists believe could unfold by year’s end.
The supply side shows a promising increase, with a notable 18.5% rise in new listings compared to the previous year, outpacing sales and indicating a buyer’s market. The sales-to-new listings ratio stood at 33%, further highlighting this trend.
TRREB president Jennifer Pearce commented on the situation, "The slight increase in July sales compared to last year is promising. With the Bank of Canada's recent rate cuts, we anticipate further reductions in borrowing costs, which should spur more sales as buyers enjoy lower mortgage payments."
Year-over-year, sales have improved for detached, semi-detached, and townhomes by 3.3%, 7.3%, and 8.3%, respectively, though condo sales saw a slight decrease of 1%.
Mercer concluded, "Buyers currently have significant leverage. The upcoming months should see them benefiting from more affordable mortgage payments and a robust inventory, keeping home prices relatively stable for now. However, as this inventory diminishes and market conditions tighten, we expect prices to begin climbing again."
In Summary:
July has brought a cooling period for the Toronto real estate market, as evidenced by the dip in home prices and an increase in property listings. This shift offers potential buyers a unique advantage in terms of selection and bargaining power, setting the stage for a dynamic market as we move towards the end of the year. With interest rates potentially declining further, the landscape of Toronto real estate could see more active participation from first-time homebuyers and those waiting for the right moment to enter the market. As the summer trends give way to autumn, monitoring these changes will be crucial for both buyers and sellers aiming to make informed decisions in a fluctuating market.