The Greater Toronto real estate price boom continued to unwind last month. Toronto Regional Real Estate Board (TRREB) data shows the price of a composite benchmark (typical) home fell once again in October. Prices have now rolled back to where they were 3-years ago, falling nearly half the cost of a home just 10-years prior.
Toronto Real Estate Prices Rolled Back 3-Years, Peak Losses Hit $253k & Counting
The composite benchmark price of a home in Greater Toronto, in Canadian dollars.
Source: TRREB; CREA; Better Dwelling.
Greater Toronto real estate prices have officially rolled back to where they were 3 years ago. The price of a typical home fell 0.8% (-$8,400) to $1,060,300 in October. It helped to push prices 3.3% (-$36,700) lower than last year, and returned prices to the lowest level since September 2021. Most definitely not what the city’s real estate investors have become accustomed to.
Is The Bottom Near? Toronto Real Estate Prices Show Minor Signs of Firming
The annual growth rate for the composite benchmark home across Greater Toronto.
Source: TRREB; CREA; Better Dwelling.
Those looking for price stability may be in luck soon. The negative annual growth has gotten smaller for 3 consecutive months now, and off the 5% decline reported back in July. It’s too early to run with that take, since monthly declines are still substantial. The slowing of 12-month declines is largely telling us the size of declines are just smaller than last year. That’s a long way from the narrative that growth will return soon.
Toronto Real Estate Prices Have Fallen 19% Since Peak, Nearing Some Definitions of A Technical Crash
The decline seen last month was just enough to plunge to a new 3-year low, beating the past two. Since hitting a record high in March 2022, the TRREB benchmark has fallen 19.3% (-$253,500). To put the decline in context, the dollar value is nearly a quarter (23.5%) of the current price, and almost half the price (47.2%) of a home 10-years ago. The drop is just shy of being technically considered a “crash,” a price correction of 20% or more from the all-time high in a short period.
Greater Toronto home prices are still falling but they are showing some minor signs of firming. This is largely due to falling rates, or anticipating rates will fall, helping to motivate buyers. However, this is still a market at a price point that’s largely out of reach for households and dependent on investors. Those investors were motivated by the narrative of higher rents supporting these valuations. Now with immigration policy seeing sharp reforms in the coming months, rents are expected to decline and the narrative will shift. That may motivate more investors to step back and wait a little longer for a clearer market direction.
So I bought my semi-detached in High Park for ~$400k in 2014, and thought it was a little weird that $253k is almost half of a typical home in Toronto. Pulled the TRREB report and I was right, it’s more than half of the benchmark they provided back then.
Are they just straight up cooking the books or do they have a weird inflation model that doesn’t match Stats Can?
I think there’s a report where Oxford Economics or Capital Economics or one of them explains it’s opaque junk and prices corrected, but they adjusted the peak down so it would look like a smaller decline.
The fun part is Realtors can’t actually explain if they think it’s wrong, it’s considered “disparaging the industry” or something and they get fined and have to remove the comment or lose their registration.
Fascinating how vacancy is rising, population growth is slowing, but cheaper credit softened the declines. I’m starting to think this is a bubble if it’s just related to how cheap credit can get.
Forget about Canada for 20 years. New USA houses cost 400K or less. See youtube, zillow, redfin and landsearch etc.
This is not fair and the government must step in and support housing prices.
Trudeau promised that house prices would increase so now it is time to keep that promise and either increase immigration or drop rates to zero to stimulate house prices.
Attention, readers! I urge you to pay special attention to the term “PEAK” in this analysis.
When we refer to “PEAK,” we’re discussing a striking increase in home prices, which surged by $146,000 in a mere 90 days—from January 1 to March 31. This impressive rise translates to an average daily appreciation of $1,622.
Here are the average prices reflecting this shift:
– December 2021: $1,176,000
– March 2022: $1,322,000
– Total Appreciation: $146,000
– Timeframe: 90 days
– Daily Average Appreciation: $1,622
However, if we disregard the “PEAK,” we encounter a different story: the average mortgage rates have skyrocketed from 1.6% to 6.5%. Nevertheless, we see that average home prices have remained remarkably resilient—a fact that often escapes the notice of so-called experts who delve deeply into market trends.
For a clearer understanding, let’s compare year-on-year price changes without the exaggerated impact of the 90-day “PEAK”:
– 2020: Average Price $930,000
– 2021: Average Price $1,095,000
– 2022: Average Price $1,191,000
– 2023: Average Price $1,126,000
– 2024: Estimated Average Price $1,130,000
The only significant drop in average price occurred in 2023, amounting to $65,000, largely due to the inflated average from the “PEAK” in 2022.
Investing in real estate is a long-term commitment best suited for those prepared to hold onto their properties for at least 3 to 5 years, as opposed to those seeking quick gains.
As a proud Realtor, I wholeheartedly believe in the strength of the real estate market in the Greater Toronto Area (GTA). I confidently project that the average price in the GTA will soar to around $1,600,000 by the end of 2029 (just 5 years from now). Furthermore, I expect condominium prices to remain soft for the next 12 to 18 months, while growth will primarily be seen in the freehold sector.
Let’s remember this discussion and revisit it in a few years to see how accurately we’ve assessed the market.
Sincerely,
Riyaz Rauf
The underlying problem with this sort of data is that it doesn’t represent the cost of the same property selling over and over in order to track its price increase or decrease. What it tells me is that the ‘average’ price for a property is selling at a given lower price. In trying times, people aren’t exactly selling their 2M houses and buying 3-4M properties and showing prices actually rising. The average property being sold is lower, which would be appropriate because people are still trying to get into entry-level homes or condos.
It’s literally the opposite. The benchmark is an indexed paired re-sale model, not the average price. The average is up which is what the industry led with before releasing the benchmark adjustments later than day.
And yet builders in Barrie are asking for a millon for 1500sq feet. Something is not adding up.
Someone needs to seriously breakdown the cost of a wooden shack house. How many 2×4’s are used, how many shingles and how many plywoods. Add the cost up. It ain’t close to 100k
Permits and materials all in is roughly 200k. Double that for labour to 400k. Land speculation and taxes are the real inflated aspects of housing construction.
I mathed it out using City of Toronto website and Home Depot prices + industry average quotes.
There is no known models to simulated the situation we are in, because we have never been in this situation before.
The economy has been in a unsustainable direction due to artificial population growth due to mass immigration. Bulk money coming in from our migrants that have limited funds, and are looking for jobs or investment to support themselves in our high cost of living. They have a limit on their funds.
So now they are drawing on the system instead of putting back in.
The input of funds is limited and completely unsustainable. And we are starting to see it now. Everything is over loaded and labour markets are blooded and this is just the beginning.
Dig in and get ready for a fight, and we get deeper into a hole that they will finally call it a recession.