Toronto Real Estate Prices Drop As New Listings Surge 44% Higher

Greater Toronto real estate prices are once again moving lower as investors pull back. Toronto Regional Real Estate Board (TRREB) data revealed prices moved lower in September. It marked the third consecutive month for falling home prices, nearly wiping out gains made after a central bank pause. Despite a new pause, home sales are falling and inventory is rising aggressively—with the market flashing an indicator that traditionally points to lower prices.  

Greater Toronto Real Estate Prices Pull Back For A Third Month 

Greater Toronto real estate prices slipped once again. The TRREB benchmark price fell 1.3% (-$14,400) to $1,112,700 in September. In the City of Toronto, the benchmark dropped 1.0% (-$10,700) to $1,108,600 over the same period. The benchmark remains above last year’s levels, but last month marked the third consecutive decline for prices, nearly wiping out all gains made earlier this year. 

Greater Toronto Real Estate Resumes Down Trend

The composite benchmark price of a home across Greater Toronto.

Source: TRREB; Better Dwelling.

Need some market context? Greater Toronto’s benchmark price peaked in March 2022, with rate hikes breaking the speculative sentiment. Typically monetary policy takes months to trickle to the market, but exuberance can break as soon as the market thinks it’s over. Any doubt this was the case can be set aside after the BoC “pause” in January of this year. Without any changes to credit markets, speculators returned, pushing prices to reclaim 7 points from the correction. 

Greater Toronto Home Prices From Peak

The Greater Toronto benchmark price change from the March 2022 peak. In percentage points. 

Source: TRREB; Better Dwelling.

Home prices returned to losing ground with another BoC hike. As of September, the benchmark is 14.8% (-$195,000) lower than the record high last year. After three consecutive months of price declines, the benchmark is close to wiping out any gains made earlier in the year, and at the highest level since March 2023. 

Greater Toronto Real Estate Sales Are Weak & Inventory Is Suddenly Ripping Higher

Greater Toronto housing demand was supposed to get a boom from population growth, but sales didn’t get that memo. TRREB reported sales fell 12.3% to 4,640 homes in September, about 7% lower than last year. Sometimes sales fall due to a lack of inventory, but that wasn’t the case last month. 

Greater Toronto’s lack of inventory was suddenly resolved with weaker price growth. New listings of homes for sale ripped 36% higher to 16,300 units in September. Compared to last year, new listings were 44.1% higher. The market is incredibly soft, which is good news for buyers—but not so much for anyone trying to sell after buying at peak.  

The sales to new listings ratio (SNLR), used to determine relative demand, fell to just 28.5% in September. Above 60% is a seller’s market, where prices are expected to fall. Between 40% and 60% is balanced, and supply is considered just right for the demand, leading to little movement in price. At just 28.5%, this is well into buyer’s market territory, when prices are expected to fall.

Greater Toronto real estate prices launched higher as investors captured a bigger share of the market. Now with prices no longer driving investor FOMO buying, there’s a gap left where first-time homebuyers used to be. Until prices fall back to their budget or real estate gets another bout of exuberant stimulus, it looks like the market is going to be a slow moving one. 

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  • Jay 9 months ago

    Good article, looks like rates are finally hitting home. Pivot unlikely until 2025 since BoC will have to defend CAD exchange rate.

    Slight error in the SNLR of above 60% prices fall(==rise).

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