Toronto Real Estate Prices Fell An Average of $1k/Day, Down Over 15% From Peak

Greater Toronto real estate prices continue to fall at an alarming rate. Toronto Regional Real Estate Board (TRREB) reported composite home prices fell further in August. A typical home has seen prices fall an average of $1k per day, reversing nearly a year’s worth of gains. Negative growth is expected within weeks. 

Greater Toronto Real Estate Prices Fell $33k Last Month

Greater Toronto real estate prices are still falling, and doing so at a brisk pace. The composite benchmark price, which represents a typical home across the region, hit $1,125,000 in August. It’s down 2.8% (-$33,000) from July, remaining 8.9% (+$91,000) higher than last year. Mixed messages on what that means, but it could be good news for buyers.

Greater Toronto Real Estate Are Off The Peak

The composite benchmark price of a home across Greater Toronto.

Source: TRREB; Better Dwelling.

Home Prices Fell An Average of $1k Per Day

Prices are falling fast but they’re still up considerably. August’s price decline saw the price of a typical home fall over $1,000 per day on average. At the same time, prices are up $91,000 from last year and $279,600 higher than March 2020. The vast majority of homeowners in Greater Toronto are still up significantly. 

Annual Home Price Growth Is Back To October 2021-Levels 

Annual growth is decelerating and expected to go negative in the coming weeks. At 8.9% in August, this is still higher than home prices typically grow. However, it’s the lowest rate since June 2020. Prices are now down 15.2% from the record high reached in February, and back to October 2021 levels. Not even close to when interest rates were first cut but prices are coming down fast, and are expected to fall further

Greater Toronto Real Estate Price Growth Is Decelerating

The 12-month percent change for the composite benchmark price of a home across Greater Toronto.

Source: TRREB; Better Dwelling.

Home Prices Likely To See Negative Annual Growth In October

When prices are averaging price drops of over $1k/day, the market is unlikely to see growth anytime soon. First it would have to stabilize, typically occurring over several months as monthly price declines shrink. With the current momentum, prices should continue to fall in the coming weeks — at a slower rate if the market improves.  

Unless a miracle (or curse) occurs to send prices higher within the next two months, October will see negative annual growth. The price of a home might also plunge 20 points below the peak, making it fit the technical definition of a “crash.” The former point means there won’t be anything to soften the impact from a psychological angle. The latter point is likely to be a paradigm shift, when the market can be referred to officially as a crash. Breaking the speculative psychology is what’s expected to pop the real estate bubble, and restore the market. 

It might not sound great, but it’s not all bad news. First-time homebuyers are likely to emerge as the winner in the coming weeks. Many are now used to paying supersized monthly costs for shelter. The biggest hurdle many have is the downpayment, which is frequently subsidized with loans from friends and family. Higher financing costs and lower prices mean fewer investors and more first-time buyers — the opposite of what banks like RBC have been observing over the past couple years.

5 Comments

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  • Ron Bruce 3 weeks ago

    Real Estate is looking more like a casino every day. The House (Bank) never loses. May be delayed in picking up their winnings, but guess who’s in charge when rewriting the mortgage?

    • W8 3 weeks ago

      Will be interesting to see what happens.

      On one hand, the banks got to discharge a tremendous amount of risk via CMHC sub 20% down payments.

      On the other hand, the banks currently have an abundance of “assets” on the books, aka outstanding mortgages, whose valuations are largely illusory. Assets could very quickly reclassified as liabilities.

  • Ike 3 weeks ago

    For people that bought a home to live in, none of this should be an issue.

    For people that bought so they could flip for some profit, yes. They should be concerned

  • Kim 3 weeks ago

    Looks likely we are going to get to pre-pandemic prices sooner.
    I was thinking it could take till 2024.
    It’s really hard to predict this one because the gains were so weird to begin with.

  • Abs 3 weeks ago

    But I still don’t understand why there are lot of unoccupied homes in the neighborhood….

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