Greater Toronto real estate took one step forward and two steps back last month. TRREB data shows home sales climbed in July, hitting a 4-year high for the month. Firming home sales are an improvement, but it was far from a market recovery. Any progress was overshadowed by a sharp price drop and a new inventory record.
Toronto Real Estate Prices Are $302k Below Peak, Nearly 5% of the Decline Was Last Month
Toronto real estate prices: TRREB composite benchmark in Canadian dollars.
Source: TRREB; CREA; Better Dwelling.
Greater Toronto real estate prices are still playing the game of price discovery. The price of a typical home (composite benchmark) fell 1.4% (-$14,100) to $981,000 in July, bringing them 5.4% (-$56,200) lower than last year. It’s worth emphasizing the monthly drop, as the single month represented a quarter of the annual decline.
The region’s home prices have dropped sharply since peaking back in February 2022. The benchmark is currently 23.6% (-$301,900) below the record high, with the July drop alone representing 4.7% of the total decline.
The silver lining is that home buying is starting to thaw with lower prices.
Toronto Real Estate Sales Hit A 4-Year High For July, But Remain Well Below Historical Norms
Toronto real estate: TRREB home sales for July.
Source: TRREB; CREA; Better Dwelling.
Greater Toronto home sales improved from last year. TRREB sales hit 6,100 homes in July, rising 10.9% above last year and marking the most for the month in the past 4 years. Before calling it a recovery, as some industry experts did this morning, the past 5 years have been abysmal. Last month was 21% below the 10 year average for July, and such weak volumes were rare prior to the multi-year rut. With the exception of 2017, when the non-resident buyer tax kicked off, one would have to go all the way back to the 2002 downturn following the tech bubble and Canadian oil patch recession.
Toronto Real Estate Saw The Second-Most New Listings
Greater Toronto still has a supply problem—just not in the same direction as pre-2020. There were 16,665 new listings in July, up 5.7% from last year. It was the second biggest July on record, only beat by the 2020 surge from the initial reopening of the pandemic market.
The demand balance improved slightly from last year, but not all that much. The sales to new listings ratio (SNLR) reached 35% in July, about 2 percentage points higher than last year. That still places the region in a buyer’s market, where prices are expected to fall.
It’s worth noting that both last year’s sales and new listings saw upward revisions.
Toronto Real Estate Inventory Hits A New High
Toronto real estate: TRREB active listings for July.
Source: TRREB; CREA; Better Dwelling.
Greater Toronto real estate saw a mild sales recovery, but the flow of new listings remained positive. This helped push inventory to 30,220 active listings in July, 26.2% higher than last year. This is the most inventory ever recorded for the month, with the bottom of the 1990s bubble pop in 1995 being the only thing close—though it was still nearly 9% lower.
Greater Toronto real estate is acting like a normal market, which is somewhat uncharacteristic. Home prices are falling as inventory rises, helping to firm sales. That’s expected since lower prices help enter the budget of more qualified potential homebuyers. All of this is positive for the market, though firmer sales aren’t the same as a recovery.
There’s also the issue that few people are willing to “catch a falling knife.” That is, few people are willing to guess at the bottom of the market, even if it maximizes savings. A buyer of a benchmark home in June with a minimum down payment would have seen one-fifth of it wiped out by the end of July. Just 4 similar months could push that borrower underwater. An issue that the handful of buyers in the market are unlikely to consider, but their lenders will.