Greater Toronto real estate demand further eroded last month, but buyers likely didn’t notice. Toronto Regional Real Estate Board (TRREB) data shows home prices climbed in February. It wasn’t due to a lack of inventory, which hit the highest level since the 2008 Global Financial Crisis. Nor was it due to sales, which fell to one of the lowest levels on record. It appears this trend is driven entirely by exuberance.
Greater Toronto Home Prices Climb Higher
The benchmark price of a typical home across Greater Toronto.
Source: CREA; TRREB; Better Dwelling.
Greater Toronto real estate prices advanced last month, though not as much as it did the year before. The price of a typical home increased 0.4% in February to end the month at $1,073,900, about 1.8% lower than the same time last year. This time last year, prices made a move about 7x larger.
That said, the annual trend looks to be heading in the opposite direction of a recovery.
Greater Toronto Real Estate Price Declines Are Accelerating
The annual rate of change for a composite benchmark home across Greater Toronto.
Source: CREA; TRREB; Better Dwelling.
Toronto Real Estate Sales Plummet 25% Lower
Despite buyers paying more, sales are collapsing while inventory piles up. TRREB reported just 4,037 sales in February, down 27.5% from last year. Outside of the pandemic year, this was the weakest month since the Global Financial Crisis.
Toronto Real Estate Inventory Hits The Highest Level Since 2008
The falling sales weren’t due to a lack of inventory either. Annual growth of new listings came in 5.4% higher to hit 12,066 homes in February. This helped to push total active inventory to the highest level since, well… the Global Financial Crisis.
Fewer buyers and more sellers helped to push the sales to new listings ratio (SNLR) higher. The fundamental demand measure fell to 34% in February, placing it firmly below the balanced market threshold. Experts generally believe that an SNLR below 40% indicates a market is oversupplied relative to demand, and prices will fall. It appears buyers disagree.
Greater Toronto real estate saw some of the weakest demand on record, and loftiest inventory levels in decades. However, prices advanced slightly from a month prior. It might seem perplexing from a strictly supply and demand perspective, but this is credit-driven exuberance. It wasn’t unexpected either, with the Bank of Canada (BoC) recently warning policy makers against “mortgage tinkering,” as it would cause exactly this type of scenario. Mission accomplished.