Toronto Real Estate Prices Are Dropping Up To $2,100 Per Day

Toronto Real Estate Board numbers show neighborhoods in Toronto saw typical home prices drop up to $2,100 per day.

Toronto Real Estate Prices Are Dropping Up To $2,100 Per Day

Toronto real estate is finding out how fickle gold-rush buyers are when looking for property. Numbers from the Toronto Real Estate Board (TREB) show that sales are experiencing rapid cooling. The rapid drop in sales is spooking buyers, and sending prices substantially lower in just one month.

Benchmark Prices Dropped $37,700

Toronto real estate prices are losing ground, and fast. The composite benchmark price across TREB fell to $773,000, an 18% increase from the same time last year. That’s $37,700 lower than it was last month. In the 416 area, prices fell to $807,800, a 20.1% increase from the same time last year. This is down $21,700 from the month before. The benchmark price is softer, but prices are actually still showing pretty steep gains. A hot market typically posts 2-3% gains when inflation adjusted, so this should really highlight how out of whack Toronto real estate prices are right now.

The composite benchmark remained up in all neighbourhoods, but declined from the month before in almost all. The biggest declines were observed in the Bathurst Manor area (TREB C06), where the benchmark prices fell $64,300 in just one month. The composite price of a home in that neighbourhood is now $1,081,000, still a 17.98% gain from the year before. The second largest drop was observed in the schmancy area of Lawrence Park North (TREB C12), where the benchmark fell $58,900 from the month before. The benchmark price in that neighbourhood is now $1,947,800, still up 16.96% from the same time last year.

Source: TREB.

Listings Increased 5.1%

Inventory is building much faster across TREB. New listings hit 14,171, a 5.1% increase from the same time last year. Active listings across TREB stood at 18,751, a massive 65.3% increase from last year. Much of this has to do with buyers taking a little longer, as the average time to purchase increased over 31% to 21 days. We’re still finding some gaming of the active listings and days on market, but not nearly as much as in 2016.

Source: TREB.

Sales Dropped Over 40%

Sales showed sharp declines across the TREB. July saw 5,921 sales, a 40.4% decline from the same time last year. Breaking that number down, the 416 saw 2,282 of those sales, a 34% decline from last year. The 905 (a.k.a. the ‘burbs) saw 3,549 sales, a 44% decline from the same time last year. Sales dropped across the whole GTA, but there was a much bigger drop in the suburbs of Toronto.

It may not be the super hot market the city saw just three months ago, but the only people impacted at this point are recent buyers. Although the more prices drop, the harder it is to attract new buyers since… who wants to catch a falling knife? Over the next few days, we’ll break down the market by segment, to give more detailed insights.

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  • Reply
    Justin Thyme 7 months ago

    A self-fulfilling prophesy – if buyers expect prices to continue to drop they will hold off buying, forcing prices to drop even further.

    Why buy now, when you can purchase cheaper next month? And cheaper the month after? And even cheaper the year after?

    • Reply
      Thomas Mirkovich 7 months ago

      You are assumption only works if Sellers HAVE TO sell. If a Seller does not need to sell, they will wait until they get the price they want or simply stay put. The worse part about this market is that it’s become a stand-off between Buyers and Sellers.
      The beginning of this year was insane but if you look at the numbers (like any investment tool), prices are still higher then they were a year ago.

      • Reply
        Alistair McLaughlin 7 months ago

        If a Seller does not need to sell, they will wait until they get the price they want or simply stay put. You assume that sellers can put a floor under prices by removing themselves from the market. Refusing to sell doesn’t stop the market price of your house from dropping. In a slump, the few houses that do sell will be the comparables that determine the market price of every other house in the neighbourhood. Some owners must sell. Divorce. Job loss. Illness. Death. Those sales, however few in number, are what determine market prices for the rest.

        The worse part about this market is that it’s become a stand-off between Buyers and Sellers. That is typically how a housing slump starts. First sales plummet, then prices follow. Except in this case prices moved rapidly off their peak at the same time sales volumes dropped. What that means for the next few months is anyone’s guess.

      • Reply
        Neo 7 months ago

        You are also ignoring first time buyers DON’T have to buy either. They will sit on the sidelines and wait. This whole situation has been one big pyramid scheme with the necessity to shovel new buyers in at the bottom to feed upstream. First time buyers are more important to this market than unmotivated sellers.

  • Reply
    Justin Thyme 7 months ago

    Juxtapose the two graphs. Notice that twice, when the average price increase stabilizes (flattens), this flattened period ends when listings and sales drop off. Then, when the descent path of listings and sales cross, prices dramatically increase again.

    Except that the LAST iteration, prices did not stabilize, but immediately went into decline at the peak, co-incident with the declines in listings and sales. An anomaly from the pattern.

    It will be interesting to see what this anomaly means.

  • Reply
    Nelson 7 months ago

    HA, HA! (pointing finger at thousands of Torontonian Millennials and Baby Boomers).

  • Reply
    paul 7 months ago

    Buyers need to wait and see, just like buyers in the past year panicked to buy and are now completely effed for life..ive seen places sell for 2.2 6 months ago which on the same street a better lot and house is listed for 1.6 and zero offers and not selling and may get 1.3. The price boom was pure debt speculation and a pure bubble. period. Who ever got in and out won, who ever, did not get out is done.

  • Reply
    Tommy 7 months ago

    I bought an investment property in June, getting a $130k discount on what the property was selling for at the start of May. I’m not at all concerned about any further month-to-month price declines (year-over-year price declines would be a bit more interesting). Toronto is a big stable city that will see real estate prices increase slowly again over time. In the interim, my investment property will be building equity. I’ll unload when the next wave hits whether that’s 5, 10, or 20 years from now.

    • Reply
      Neo 7 months ago

      The last time the Toronto market corrected it took 13 years to reach peak prices again. (1989 to 2002). More if you adjust for inflation. You may be waiting closer to 20 years than 5 years.

      • Reply
        Tommy 6 months ago

        True, but if I had been old enough to buy houses in 1989 and kept them, I would have made millions off each property, not including rent earned. With stagnant wages, job insecurity, and increasing rents, it’s always better to be a landlord than a surf.

  • Reply
    Gregory 7 months ago

    Housing demand remains very strong, maybe not for purchase but the Rental Market…. Toronto Condo Rents are up 5% just in last 60 days, aka to

    Hearing “offer dates” on rentals, “bidding wars”….. I know somebody who rented his condo, and the renter never even saw it in person (just pictures)….just grabbed it, and wired the funds (university student).

  • Reply
    Al Daimee 7 months ago

    It’s no surprise we would see a correction after the insane 30%+ run-up in prices from March 2016 to March 2017. There was no rational explanation for it, but buyers were just willing to pay those prices. Speaking to fellow Realtors, we were astonished by the prices being paid. It just wasn’t sustainable and we are now seeing the correction playing out. It could end in the fall or it could continue to the spring. Nobody knows for sure, but I think anyone who had plans to buy should be watching closely for opportunities, as the market could turn upward quickly, as it did in spring 2009, where economic conditions were far worse than they are now.

    Inventory always increases in the spring, so there is no surprise there that active listings are up and a lot of would-be spring sales were pulled ahead into Q1. The timing of the government stepping in was likely unnecessary had they just let the market level itself out.

    The rent control plan in combination with the minimum wage increases in 2018 and 2019 have set a perfect storm for landlords to demand, and justify, increased rental prices. Next year, condo maintenance fees and our overall cost of living is about to jump significantly. Without an increase in base rental price, being a landlord becomes a losing proposition as the CPI Index won’t allow enough of a rental increase compared to the impending condo fee increases due to the rising labour costs that comprise the majority of expenses incurred by condominium corporations (security, cleaning, maintenance contracts, etc.).

    If rents continue to rise, while real estate market prices come down, eventually, you hit a point where tenants will shift to buying, as it makes more sense. I imagine that there will be pressure for incomes further up the income ladder to increase in response to higher cost of living, as well. This starts to shift things when it comes to affordability of Toronto real estate. It’s way too soon to make predictions, but after travelling extensively through Europe and parts of Asia and seeing varying levels of the cost of living vs. income, I can see us heading toward being a more expensive city with expectations of higher pay down the road to offset this.

    The Ontario government had said they were trying to avoid “unintended consequences”. Well, they certainly didn’t accomplish that in my opinion. Start tightening that wallet for now should the minimum wage increase actually go to $14/hr as of Jan 1st, 2018. We are going to feel that impact in everything we buy.

  • Reply
    This week's real estate news: Buyers & sellers waiting, prices are dropping 7 months ago

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