Demand for new homes in Toronto has fallen to one of the weakest levels in years, despite soaring incentives. Altus Group and developer-group BILD GTA data shows new homes sales plunged even lower in October. Even with prices down more than 30% since peak and falling rates, buyers are still sitting the market out. The problem may only be getting started for condo apartments which are falling faster than other segments, and have seen sales plunge over 91% from the 10-year average.
Greater Toronto New Home Prices Down More Than 32% Since Peak
Greater Toronto new home prices are still in free fall, reversing years of gains. The price of a new single-family home fell 1.0% (-$15.6k) to $1.55 million in October. This represents a 4.9% (-$79.8k) drop from last year, and prices are now 32.6% (-$751k) lower than the record high reached in 2022. As of last month, prices are back to where they were in 2021—rolling back 3 years, including the parabolic surge.
Source: Altus Group.
Condo apartment prices have been stickier but they’re suddenly falling even faster. The benchmark of a new condo fell 1.8% (-$18.9k) to $1.0 million in October, a monthly rate of decline almost 2x the single-family benchmark. It’s only 1.6% (-$16.8k) lower than last year, smaller than the monthly decline and emphasizing the strength of the downward pressure. However, the plunge from the record high is similar at 32.5% (-$483.7k) lower, putting prices back to the lowest level since 2020.
Toronto New Homes Sales Fall, Condos Down 91% From Average
Behind plunging prices is weak demand for new homes, at least at the current price level. Greater Toronto developers saw just 765 new homes sold in October, down 60% from last year and 77% below the 10-year average.
Weakening single-family demand is far from new, since the price is well out of reach for most households. Just 555 units sold in October, virtually unchanged from the volume last year. Sales are 45% below the 10-year average for the segment, meaning it’s a little underrepresented considering the total.
Condo apartments are a new area of weakness falling below even last year’s weak activity. Just 210 new condos sold across all of Greater Toronto in October, down a whopping 84% from last year. The drop is 91% below the 10-year average, and it’s worth recalling that new home activity wasn’t particularly strong in half of those years.
Despite existing home sales bouncing last month, Greater Toronto new homes didn’t see the same upward pressure. Even with prices more then 30% below peak, the market continues to remain muted. That’s not a new issue for single-family homes, which have struggled to see a boost even when rates fell to record lows. However, this is new for condo apartments—a segment almost entirely dependent on investors now that prices are out of the reach for typical end-users. With prices on the downswing and rents falling, investors have understandably taken a break from the market.
The factor in the sales reported over the past few years aren’t closing, so really it’s even lower than the volume reported.
Who would have thought letting the market be entirely dominated by speculators with negative cashflow means falling prices prevent anyone from buying a home.
Now prices need to fall all the way to where a natural market end-user would purchase, likely another 20 points lower. The gov already had to pause risk assessment updates at OSFI and “blanket assessments” that essentially just allow the purchase price to be used as the assessment price to close the mortgage.
They can keep trying this but all of this is coming at the expense of investments in Canadian dollars. Even the banks have begun doing US dollar issuance to continue capital raises.
Local banks raising money in USD is such a red flag. It’s what you see in developing countries, not something we typically expect in a country that’s often seen as a minor capital safe haven.
Hello Mortgage Guy,
Can you please clarify what banks have begun doing US dollar issuances? I seemed to have missed the development and cannot find the relevant information online?
What do u mean by 20 points? 20%? How much more than the natural do u think?
Smart buyers take their money to the USA where they can buy new houses for less than 400k or resale homes for less than 200k.
See youtube, zillow, redfin landsearch and others
How can the central bank continue to lower rates when the CAD is literally in free fall & no end in sight now that the USD is on a run?
Our cost of living is only going to increase. This BUBBLE
might finally be at the tipping point. No “free” money, lower immigrant “investors” and declining property values. And there are probably no more “rabbits” for JT to pull out. Maybe one, but it will likely be DOA.
Will TPTB deliberately crash the loonie to sub-50 cents per USD just to keep the housing bubble going?
Currency devaluation is indirect theft of people’s savings.
Hmm, why the focus on new homes? The number is so small compared to all home sales. The 60% drop in new home sales calculates to about only 1200 fewer sales. Seems pretty insignificant in the grand scheme. Or is it just me?
Because, unlike housing speculators, homebuilders have to keep building and selling if they want to remain in business, and what they do happens to matter for the overall housing market. If there’s less demand for new houses and condos, for instance, builders will have to find ways to reduce prices, and if there’s downward pressure on new home prices… eventually that is going to apply downward pressure on existing homes as well; because why would you buy something used when you can just get something brand new at a lower cost?
Trudeau needs to get involved to support prices. People depend on the value of their homes for retirement. Canada MUST drop rates to zero to protect house prices. For the sake of the economy.
No. Absolutely not.
That’s the thinking that got us into this mess in the first place. Correction is necessary for a healthy economy. Not mortgages that top 7000/month, sucking dry every spare penny Canadians earn.
If peoples retirement depended on home prices skyrocketing in price well above the normal trendline then they planned poorly. Prices need to to come back to normal for the long term good of the economy. If a bunch of investors and speculators go broke well too bad, who said investments were guaranteed. If you bought a house during the biggest bubble we’ve ever had and maxed out your monthly payments during the period of lowest interest rates that we’ve ever had then you set yourself up for failure. Prices always had to come down eventually and rates had to return to normal
Nobody cares about broke homemoaners
Cry us all a river.
Nobody cares about broke homemoaners
Cry us all a River.
Those 4.9 million expiring (between now and December 2025) visas are concentrated in Toronto GTA, and to a lesser extent in Vancouver and Montreal. Lot’s of empty rental places will be hitting the market over the next year. Should see another 20% or more as prices usually overshoot in either direction.
Prices on new homes needed to be controlled, realtors and other investors who buy more than Two houses for investment should be charged significantly higher taxes.Renters should be given a fair rental price because rent and utilities and food prices go up every year but our pay cheque stays the same . Minimum wage needs to be at least $20 in Ontario.