Greater Toronto real estate’s recovery slipped beyond the horizon in August, despite a small bump in buyers. TRREB data shows a minor year-over-year increase in sales, but demand remains near historic lows and far from normalizing. At the same time, more sellers flooded the market, pushing inventory to a record high and forcing deeper price cuts.
Toronto Real Estate Price Declines Continue, Now 24% Below Record High
TRREB Composite benchmark: The price of a typical home across the Greater Toronto Area in Canadian dollars.
Source: CREA; TRREB; Better Dwelling.
Greater Toronto real estate prices are finding little relief despite industry optimism. The price of a typical home fell 1.15% (-$11,300) to $969,700 in August—an average of $364 per day over the 31-day period. It was the second-largest monthly drop in the past year, casting a little more doubt on firming prices.
By itself, that may not seem all that large—but it’s very brisk considering the current pace of correction. Prices are 5.15% (-$52,700) lower than last year, meaning more than one in five of those dollars lost were in August. Prices are now 24.35% (-$312,200) lower than the record high reached in February 2022, the height of the low-rate-fueled buying frenzy. Congrats to those sellers, eh?
Toronto Real Estate Sales Rise, But It Was The Second-Worst Month In A Generation
Toronto real estate sales: TRREB home sales via the MLS for August.
Source: CREA; TRREB; Better Dwelling.
Greater Toronto real estate sales showed a mild improvement from last year, but remain historically weak. Home sales climbed 2.35% higher from last year to 5,211 homes in August. Rising sales are generally a good sign, but this was still the second-fewest sales for the month in the past 25 years. Last year was the weakest August sales in a generation, if that wasn’t clear.
Sales would need to surge for the market to return to a volume considered normal. Sales would need to rise 57% from last month to reach the modest volume in August 2019—more than 24x the y/y growth reported this year. The volume of sales would need to more than double (+120%) to match the August 2020 high. It’s very hard to see a return to normal anytime soon without a paradigm shift.
Toronto Real Estate Inventory Just Set A New Record High
Toronto real estate inventory: TRREB active listings for August.
Source: CREA; TRREB; Better Dwelling.
Greater Toronto inventory also continues to grow at a breakneck speed. TRREB reported 14,038 new listings in August, up 9.36% compared to last year. This is another near-record being set—it’s second only to August 2020, the initial days of the pandemic.
The sharp increase in new listings—significantly outpacing sales—pushed total inventory to historic levels. TRREB data reveals a mind-boggling 27,495 active listings in August, rising 22.37% over last year. Last month set a new record high for August active listings at nearly triple (~286%) the record low in 2021. From the record low to the record high in equivalent time it takes to get a bachelor’s degree.
The industry is understandably looking for any signs of optimism, so it’s no surprise to see the media latch onto the rising sales. However, putting that data into context, we can see the increase is nearly a rounding error in contrast to soaring inventory. The latter problem may be compounded by a flood of new construction completions arriving, as most are investor-owned and many were planning to flip the units, since rental yields rarely made sense.
It’s worth emphasizing that markets like Toronto and Vancouver tend to lead national trends. Canada is in the middle of its second-largest real estate correction ever, but most regions have yet to feel the full impact. Few markets are positioned to rival these cities, and those that aren’t look increasingly overvalued as the price gap continues to close.