The moderation of the Greater Toronto Area’s housing market intensified last month as the region’s real estate board found July sales fell 47 percent from the same time last year and 24 percent from this past June.
The Toronto Regional Real Estate Board revealed Thursday that last month’s 4,912 sales were almost half of the 9,339 homes that changed hands the July before and are an indication that the market is easing from the frenzied pace seen in the first half of the year and at the end of 2021.
The board and real estate agents have attributed much of the moderation to the increased cost of carrying a mortgage after Canada’s key interest rate was increased by one percentage point in mid-July, making it the largest hike the country has seen in 24 years.
The hike has encouraged people to rethink their housing intentions. Prospective buyers are holding out for further drops they and brokers anticipate could materialize in the fall, while sellers are debating doing what they can from their home now or waiting for the market to turn in their favor again.
Some sellers are even terminating their listings to take advantage of the hot rental market, where vacancies are dropping and prices are up.
While January’s hot market saw 380 terminated condo listings in the GTA, real estate company Strata said June brought 2,822 — a 643 percent increase.
The moderation taking shape within sales is taking longer to appear in home prices.
TRREB found the average home price was $1,074,754 last month, a one percent hike from $1,061,724 in July 2021, but a six percent drop from $1,145,994 in June 2022.
The composite benchmark price was more than $1.1 million, up by 12.9 percent year-over-year.
Detached home prices were down three percent on a year-over-year basis to $1,362,598 last month, while their sales dropped by 46 percent to 2,203.
Prices of semi-detached homes were up by nearly five percent from last July to $1,077,750, while sales fell 45 percent to 474.
Townhouse prices crept up by six percent to $903,899 as their sales fell by 52 percent to 816, and condo apartment prices saw a seven percent leap to $719,273 and a 48 percent fall in sales to 1,365.
The market also saw a drop in new listings, which amounted to 12,046 last month, down four percent from a year ago.
TRREB felt the numbers necessitate government intervention, including boosting housing supply and reviewing mortgage policies.
Data firm Urbanization Inc. said Tuesday that he expects almost 10,000 GTA condo units to be delayed this year as increasing mortgage rates weigh on home sales.
“Many GTA households intend on purchasing a home in the future, but there is currently uncertainty about where the market is headed,” said TRREB CEO John DiMichele, in a release.
“Policymakers could help alleviate some of this uncertainty.”
He recommended the government review the Office of the Superintendent of Financial Institutions’ stress test. The mandatory test sets the qualifying rate on uninsured mortgages at either two percentage points above the contract rate, or 5.25 percent, whichever is greater.
Kevin Crigger, TRREB’s president, echoed DiMichele’s plea, saying longer mortgage amortization periods of up to 40 years on renewals and switches should be explored.
“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” he said, in a release.
“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs.”