Greater Toronto real estate wasn’t looking as confident as it had been recently. TRREB data shows the price of a typical home (composite benchmark) climbed in June 2023. However, the increase was notably smaller than recent months, potentially indicating slowing momentum. At the same time, some affluent suburbs returned to falling prices—one dropping as much as $50k in June.
Greater Toronto Real Estate Prices Are Rising
Greater Toronto real estate printed another month of gains at a high level. The TRREB composite benchmark rose 0.6% (+$6,900) to $1,171,300 in June. A substantial increase that leaves prices just 1.9% (-$22,100) lower than last year. Diving deeper, both the monthly and annual data yield some interesting insights.
Greater Toronto Real Estate Prices Are Still Off Peak
The composite benchmark price of a home across Greater Toronto.
Source: TRREB; Better Dwelling.
Monthly growth is rising at a very sharp rate—more than 3x the rate of target inflation. It also happens to be much smaller than the increases we’ve been seeing recently. Just a few months ago, the benchmark was climbing over $27k monthly. While a 0.6% increase is very large, it’s significantly smaller than we’ve been seeing. Higher financing costs are likely a major contributor to throttling growth.
Greater Toronto Real Estate Price Growth
The 12-month percent change for the composite benchmark price of a home across Greater Toronto.
Source: TRREB; Better Dwelling.
The annual growth rate also shows home prices have rolled back nearly a year’s worth of losses. It’s sparking some investors to conclude the end of a correction, but prices remain 11.4 (-$150,700) lower than the peak. We might be looking at a recovery, but we’re just as likely looking at the “bull trap” phase of an asset cycle. Only time will tell.
In the meantime, let’s talk about the price divergence across the region that’s materializing.
City Prices Are Rising Much Faster
City of Toronto home prices are rising much faster than the Greater Region. Its composite benchmark climbed 1.0% (+$11,600) to $1,154,800 in June, and is 1.5% lower than last year. The current growth rate could push prices into positive annual growth in just two months. However, growth is also slowing much like the broad trend. With rates only set to rise higher this month, it’s an uphill battle to keep pushing prices higher.
Greater Toronto Has Seen Some Suburbs Return To Falling Prices
Greater Toronto’s affluent suburbs have returned to spiraling price declines. Oakville recently saw prices climb tens of thousands per month, but not last month. A typical home in Oakville fell a whopping 3.4% (-$50,000) in June, a big shift in sentiment.
Oakville wasn’t the only suburb to suddenly begin printing lower home prices. Rounding out the five largest drops over $20k was Halton Hills (-3.0%; -$36,700), Halton Region (-2.9%;-$36,000), Milton (-2.6%;-$29,400), and Burlington (-2.5%;-$26,600). These aren’t cottage country markets either, but close suburbs.
A Few Smaller Markets Saw Prices Launch Higher
A few markets saw large gains as well, just not as big as the largest declines. The biggest surge was observed in Pickering, where prices climbed 3.0% (+$31,800) in June. Following it for highest growth rate was Brock (+2.6%;+$18,700), and Dufferin County (+2.4%;+$19,300).
A sharp increase is unusual but not totally unexpected as interest rates climb. Sales tend to climb when panicked buyers scramble to use mortgage pre-approvals. If they don’t, they risk having to pay a higher interest rate with less leverage. As those pre-approvals roll off, leverage will begin to reflect financing conditions.
Greater Toronto real estate prices moved higher, with some markets ripping higher. At the same time, slowing momentum and sharp declines in surrounding suburbs are a red flag. Higher interest rates present additional risk, especially with another hike expected this month.
Correction: Prices fell $13,981 month-over-month, NOT $50,000 as mentioned above.
Good analysis, but please include a longer term horizon. Real Estate is not the stock market. It is illiquid. Thus, a longer term horizon viewpoint is more prudent.
So based on June 2023 numbers, the Toronto real estate market performance is:
– UP – 3% on a year-over-year bases
– UP – 8% on a 2 year basis
– UP – 27% on a 3 year basis
– UP – 46% on a 5 year basis
– UP – 403% on a 20 year basis
Does “up 403% on a 20 year basis” strike anyone as healthy growth? It’s not like salaries are up 403%. Money laundering, speculation, years of artificially low interest rates, and the general commodification of housing has left half of the population so far behind that they’ll never be able to afford a home in/around Toronto or Vancouver.
GTA average home prices in 2023 are roughly 230% greater than the average home price in 2013.
Canada’s money supply is also 200 something % greater in 2023 than 2013.
Home prices are tied with the money supply from my perspective.
Too bad our salaries are not 😉
Effective minimum wage now like 25cad/hr for GTA just to afford rent.
Canada is a very expensive life lesson for new immigrants. Don’t believe the immigration consultants who have a financial interest in your application.