Easy come, easy go. Greater Toronto real estate prices have been booming, but are suddenly changing course. Toronto Regional Real Estate Board (TRREB) data shows prices pulled back in April. Home sales plummeted much faster than inventory, easing the pressure driving prices higher. Greater Toronto homes went from rising tens of thousands per month to falling tens of thousands in a matter of days.
Greater Toronto Home Prices Fell $22,000 In Just One Month
Greater Toronto home prices fell and the City climbed at a much slower pace than we’ve seen this year. The TRREB composite benchmark (a.k.a. a typical) home fell to $1,354,000 in April, down 1.6% (-$22,000) from a month before. In the City of Toronto, the benchmark reached $1,373,300, up 0.6% (+$7,600) from the month before. The movement might seem mixed at first, but the common trend is a very sharp drop in growth.
Greater Toronto Benchmark Price
The price of a “typical” composite home across Greater Toronto.
Source: TRREB; Better Dwelling.
One month before the momentum seemed like it would carry price growth forever. In March, home prices jumped across TRREB (+$36,000) and the City of Toronto ($57,400). April’s negative growth across TRREB might seem much worse than Toronto at first. However, the City went from a $57,400 increase to a $7,600 increase in just one month. At this rate, it would surprise few to see flat or negative growth in May, as mortgage rates climb.
Home Prices Have Seen Annual Growth Decelerate Fast
Greater Toronto real estate is also seeing annual growth decelerate very quickly. Last month’s annual growth for TRREB (+30.5%) was 4 points lower than reported in March. The City of Toronto (+25.6%) saw a more modest ~2.5 point deceleration. While more modest, losing a tenth of growth in a matter of days isn’t something to just look over.
Greater Toronto Benchmark Price Change
The annual percent change of TRREB’s benchmark price for all home types.
Source: TRREB; Better Dwelling.
Greater Toronto Home Sales Fell 41% In April
Greater Toronto home sales suddenly shrunk after a heated first quarter. TRREB reported just 8,008 sales in April, a drop of 26.9% from a month before. Sales came in 41.2% lower than last year, excluding April 2020. It was the fewest sales in the region since 2018. Falling sales aren’t unusual in markets with low inventory, but that wasn’t the case this time. Inventory levels are improving.
Greater Toronto Sales and New Listings
The number of existing-home sales and new listings across Greater Toronto.
Source: TRREB, Better Dwelling.
Toronto Home Sales Fell Faster Than Inventory, Releasing Pressure
TRREB reported fewer new listings, but the decline wasn’t nearly as significant as the drop in home sales. New listings came in at a healthy 18,413 units in April, down 11.7% from last year. Since 2015, only two Aprils have seen a higher number of new listings — 2021 and 2017. It fell less than sales, but the number of listings was above typical for the period.
Home sales falling faster than new listings means less pressure on inventory levels. The sales to new listings ratio (SNLR) fell to 43.5% in April, meaning the market is now on the low end of “balanced.” An SNLR between 40% and 60% is considered balanced, where home prices are suitable for the level of demand. Below is a buyers’ market where prices can fall, and above is a sellers’ market where prices generally rise.
Greater Toronto real estate slowed last month and it’s not a total mystery. Demand is eroding due to higher rates and buyer exhaustion. This has led to healthier levels of relative inventory, allowing price growth moderation. Economists warn once prices slow (or fall), more investors will be motivated to sell. Considering investors represent over a quarter of buyers, that’s a lot of potential inventory that can drive prices lower.