Greater Toronto real estate is slow but new housing has ground to a halt. Altus Group and BILD GTA data shows Greater Toronto has never seen fewer homes sold in July. Prices have dropped significantly from the peak, but not enough to prevent demand from hitting a record low. If a firmer market is ahead, it’s hard to see with a multi-year inventory high and distressed condo investors standing in the way.
Toronto New Home Prices Are Spiraling Lower On Weak Demand
Greater Toronto new home prices have resumed a downturn. The price of a benchmark single-family home fell to $1.59 million in July, falling 18% since the peak. They have rolled back almost two years of progress, stalling recently. However, last month’s slip may be indicating that further downward pressure persists.
Condo apartments have seen demand erode even faster, leaving a bigger price correction. The price of a benchmark condo apartment fell to $1.02 million in July, shedding 22% since the peak. Virtually all of this downward pressure is attributed to record weak demand. New condo prices are roughly where they were in mid-2020, though the sharpest (and frothiest) climb occurred in the years prior due to speculative demand. Still a long way before the exuberance is knocked out of the market.
Source: BILD GTA; Altus Group.
Toronto New Home Sales Fall To A Record Low, 70% Below Average
Demand for new homes at the current price has never been this weak in a usually brisk month. Greater Toronto saw just 654 new homes sold in July, a drop of 48% from last year and 70% below the average. It was the worst July on record, with sales generally weak most of the year—especially new condos.
Year-to-date (YTD) new sales highlight how weak the condo segment is. Buyers scooped up just 3,379 units YTD, down 60% compared to last year. That spiral makes single-family homes look good with 3,326 units sold over the same period, down 15% from last year. It may be worth remembering that a 15-point decline is still massive, and last year wasn’t particularly impressive as a comparison period.
Toronto New Home Inventory Hits An 8-Year High
Greater Toronto’s new homes are also forming a bit of a supply glut. The remaining inventory at month end climbed to 21,660 in July, an increase of 30% compared to last year. New home inventory is now at the highest level since 2016. An 8-year record isn’t too shabby.
Greater Toronto’s new home market is the weakest in at least a generation. It’s a segment of housing largely dominated by investors facing their own hurdles with the inventory they’re taking possession of. Negative cash flow, rising vacancies, and weak secondary market liquidity are becoming more common. It’s likely deterred investors from doubling down and prevented new ones from entering the market.
However, while prices have decreased significantly, they need to fall much further for end-users to re-enter the market.
Referring to price increases in the housing market, “rolled back almost two years of progress”. is an interesting use of the term progress. In this case, to describe market conditions in which many average people, especially young adults, have no hope of ever owning their own home. Only those int he real estate industry would consider increasingly over priced housing, “progress”. Not progress by my standard,
Not a real estate term. Rising prices are called progress and deflation is regression. It’s always been how it’s termed, even though it makes little sense.
The BIS finally started to kick around the idea that maybe deflation can be a net benefit to society and restore market efficiencies for young adults, but no central bank wants to hear it. Government is concerned the average person sees wealth as a rising number, even if the amount of things they can purchase is actually falling.
Thanks for the explanation Trader Jim.
The last comment sums it up New house prices need to fall a lot more. Down already 20%. Another 10% probably will not move them so another 20 % is likely. Thats well below the construction cost, but builders are in a bind they need the cash or will be bankrupted they do n0t have a choice.. Used properties have not moved all that much but the cliff is coming. Sellers can only hold on for so long but eventually they have to sell at whatever market prices are no matter how low,. Credit card bills pile up, people move and people die. They cannot all wait for the market to come back. EWe are looking at a price fall of 30 to 50 % at least before bottom for detached properties. For condos could be a lot more.
VANCOUVER AND CALGARY ARE RIGHT BEHIND TORONTO PFRICES AND SALES SPIRALING DOWN FAST. USA HOUSES FOR LESS THAN 400K IN MANY USA MARKETS ARE PULLING IN INVESTORS AND SNOWBIRDS LOOKING FOR FALL/WINTER ESCAPES. HAVE YOUR MAIN HOUSE IN THE USA AND VISIT CANADA FOR 6 MONTHS OR TRAVEL EVERY YEAR!
The quality of living is way higher in Canada . US properties come with a free gun in every room and a picture of trump and a weekly medical bill, higher than your monthly mortgage. Your comments are nonsense.
It’s literally horrifying how long Canada’s housing bubble has been allowed to inflate for. It’s been growing for like 20+ years now with no real political will to stop it.
Now Canada is deep into an immigration trap and the government is signalling strong curbs to immigration. That likely means widespread recession and acceleration in asset deflation is just over the horizon. The fact that housing demand is this weak with immigration this high should be a warning to everyone how big of a crash we might be getting in the near future.