Home prices, sales continue to fall in the GTA: TRREB

Home buyers in the Greater Toronto Area have more power to negotiate as home sales and prices continued to fall in May.

In its latest Market Watch report, the Toronto Regional Real Estate Board (TRREB) revealed that 7,283 homes were sold in the GTA in May. The figure represents a yearly decline of 38.8% and a 9% drop from April.

The average selling price in the region sat at $1,212,806 in May. Although it’s a 9.4% increase from 2021, the price is 3.3% below April levels and 9.1% below the February peak.

In Toronto, 2,679 homes changed hands last month, an annual decline of 34.6% and a monthly drop of 11.4%.

The average selling price in the city was $1,233,748 — a 10.4% annual increase, but a 0.74% dip from April figures which were the highest of the year.

New listings were relatively flat across the GTA in May, which, combined with falling sales, pushed the number of active listings up 26% year-over-year.

Toronto Regional Real Estate Board

Recent Bank of Canada rate hikes are impacting buyers in the short term, TRREB President Kevin Crigger said, and a “psychological aspect” is leading them to wait for a bottom price.

While this will likely continue through the summer, Crigger said home buyers will eventually adjust to higher borrowing costs and demand will rebound.

“The current rate tightening cycle has changed market dynamics, with many potential home buyers putting their purchase on hold,” said Jason Mercer, TRREB Chief Market Analyst.

“This has led to more balance in the market, providing buyers with more negotiating power.”

The sales-to-new listings ratio — which is key to determining who wields more power in the real estate market — sat at 65.1% in May. While still indicating a seller’s market, it’s a drop from April’s 68% and January’s 72.9%. The ratio was slightly lower in Toronto, at 63.2%.

Anything higher than 60% constitutes a seller’s market, while a ratio of 40% to 60% is considered balanced.

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The pain posed by higher interest rates is temporary, said TRREB CEO John DiMichele. The greater issue facing the GTA is the housing supply.

The recent elections have shown that senior levels of government understand the need for more housing to support regional growth,” DiMichele said.

“The shorter-term impact of higher interest rates will not be with us forever. Supply remains the long-term challenge.”