Home prices in Toronto have dropped 19 percent because the peak in April of the market, as buyers continued to sit on the sidelines while waiting for signs of stability falling farther in July.
The Toronto Real Estate Board reported the average cost of all types of houses offered in the Greater Toronto Area hit $746,218 in July, down 19 percent from the market’s peak in April when house sales averaged $920,791, and down 6 percent from June’s average selling price of $793,915.
The July sales price was up 5 percent compared to July last year, which means the industry downturn has not erased the amount of the cost gain recorded in 2017 and 2016.
Bank of Montreal economist Sal Guatieri said detached home prices are falling faster in greater Toronto than they did in Vancouver last year following the B.C. authorities imposed a tax on overseas buyers. Detached home costs have dropped 8 percent in two months at the GTA, he said, compared to some 6.4-per-cent decline on a six-month period in Vancouver.
The recent price drop came as the amount of homes sold dropped 40.4 percent in July compared to the same month last year, TREB stated. The amount of detached home sales dropped 47.4 percent during the month, while sales of semi-detached homes fell 38.6 percent, townhouse sales dropped 36.5 percent and condominium sales slid 30.7 percent.
“There is nothing positive — there are not any really great signs on the market,” said realtor John Pasalis, president of Realosophy Realty Inc. in Toronto.
Mr. Pasalis stated some of regions where average costs are currently lower than they were a year ago — such as Richmond Hill and Whitchurch-Stouffville north of Toronto — are also areas that seemed to have the maximum number of speculators and foreign buyers before the downturn. Their withdrawal from the marketplace has had a larger effect than in more neighbourhoods in Toronto’s City.
But, Brian Elder, an agent at Royal LePage Real Estate Services Ltd. in Toronto, said he considers the current market is healthier than previously, and several homes are still selling fast.
He said he worked on four deals that sold within the asking price and received multiple offers a week with customers. Vendors, have taken their homes and however, have not got any offers.
“To say costs are plummeting or the industry is collapsing is indeed premature — I do not feel that by any stretch. I believe it’s actually a terrific time to be buying, especially if you’re taking a look at a single-family home,” he said. “It’s only a normalized market. It is becoming more balanced, which is what everyone wants.”
Amid the steep decline in sales, the only modest indication of market improvement came in the slowing pace of increase in the amount of new houses listed for sale, which rose 5.1 percent in July compared to last July. New listings soared in June by 49 percent in May and 16 percent compared to the same months last year due to the fact that homeowners rushed to attempt and sell at the summit, decreasing costs and causing a glut of inventory.
There’ll be a substantial increase in new listings in September, although considers August will stay quiet. He forecasts sellers will be “serious” about finishing a deal in the autumn, while people that are toying with the concept of holding and selling out for costs above current market levels will leave the market.
“Anybody who is really kicking tires on the market will come off the market some time in August, and in September we’ll begin to see those critical sellers return on,” Mr. Zigelstein stated. “I think it’ll be substantially greater than what we are likely to see in August.”
TREB said houses have led the housing recession of the regionin the 905 region.
Detached home prices were up only 2.4 percent in the 905 area in July compared to a year ago, but are still up 8.5 percent at the City of Toronto, TREB stated. The amount of detached houses sold in July fell 49 percent in the 905 area and 41.7 percent in the City of Toronto.
Condo prices have held because of their affordability. TREB stated while semi-detached and detached house prices were both up about 5 percent compared to July, the condominium sale price in the GTA was up 23 percent in July compared to a year earlier.
Mr. Pasalis said he considers condo prices will start to slide lower given the fall in house prices.
“Condo costs can only go so high while freehold [home] costs are declining. It does not make sense — price appreciation will level off,” he said.
The Toronto market has seen home sales slide because the Ontario government announced a package of reforms on April 20 aimed at warming rapid growth in home prices in the area. The centrepiece of the plan was a new tax on foreigners.
Editor’s Note: A story Friday on home sales in Toronto wrongly identified Brian Elder as a realtor with Royal LePage Signature Real Estate Inc.. Actually, Mr. Elder is a realtor with Royal LePage Real Estate Services Ltd..