Strap in because Toronto real estate will be on an even wilder than normal ride the next few months. Toronto Regional Real Estate Board (TRREB) data shows home prices jumped in March. Other price indicators fell, with the board noting prices “bucked” the seasonal trend. Home sales dropped at 3x the rate of new inventory, returning Toronto to a balanced market.
Toronto Real Estate Price Growth Is Slowing
The composite benchmark prices, a.k.a. the typical home price, advanced substantially over the past month. The TRREB benchmark reached $1,376,000 in March, up 2.69% ($36,000) from a month before. Compared to last year, prices are now 34.81% ($355,304) higher.
Greater Toronto Benchmark Price
The composite benchmark price of a home across Greater Toronto.
Source: TRREB; Better Dwelling.
In the City of Toronto, the benchmark reached $1,365,700, rising 4.39% ($57,400) from the month before. Prices are now 28.00% ($298,700) higher than they were last year at this time. These numbers are at odds with other price indicators, but more on that in a few seconds.
Let’s talk about the growth rate of prices first, which shows a deceleration. In March, the 34.8% annual growth for TRREB is around 1 point lower than the previous month. This is still a very high rate of growth, but the last slowdown was in August 2021. It was right before the election promises to flood the market with money reignited the trend.
Greater Toronto Benchmark Price Change
The annual percent change of TRREB’s benchmark price for all home types.
Source: TRREB; Better Dwelling.
As for the City, it actually saw further price growth acceleration — though there’s a catch. The annual growth rate jumped another 0.7 points in March, but a breakdown shows it was due to condos. The rest of the segments showed price growth deceleration. We’ll cover the segment breakdown on another day.
The Average Sale Price Showed An Unusual Decline For The Season
Non-indexed price measures aren’t moving in the same direction, sending a confusing signal. The median sale price across TRREB fell to $1,165,000 in March, down 3.32% ($40,000) from a month before. Similarly, the average price fell to $1,299,894 in March, down 2.60% ($34,650) from a month earlier. A decline is odd for March when more expensive homes begin hitting the market. “The average selling price dipped slightly month-over-month, bucking the regular seasonal trend,” said TRREB.
Toronto Home Sales Fell Much Faster Than Inventory
Greater Toronto home sales took a nosedive and returned the market to normal — at least for demand. Home sales fell to 10,955 in March, down 29.9% from last year. At the same time, new listings came in at 20,038, down 11.9% over the same period. Home sales fell at 3x the rate of new inventory, as demand disappeared faster than supply.
Greater Toronto Sales To New Listings
The number of homes sold in Greater Toronto, compared to the number of new listings of homes for sale.
Source: TRREB, Better Dwelling.
The sales to new listings ratio (SNLR) is used by the industry to determine if a market is balanced, or in favor of buyers or sellers. If the ratio is between 40 and 60 percent, the market is balanced. Above 60 percent is a sellers’ market where prices rise, and below is a buyers’ market where prices tend to fall. Last month the ratio fell to 54.7%, landing smack dab in the middle of a balanced market. In February, the ratio was 64.3%, and March 2021 saw 68.7%. From sellers to buyers in the blink of an eye. If demand fails to rise with supply, home prices could reverse some gains.
Prices are up and down. What’s the deal? The benchmark price is an index conceptually similar to an inflation basket. A typical home made of the various components of different types of houses. It’s then modeled for qualitative and quantitative price changes for each component. It’s not an actual home price. At the same time, median and averages don’t standardize, meaning no quality adjustments. Though quality means less in a bubble, where amenities play small roles in price.
Some argue a benchmark lags, while others say medians and averages don’t appreciate complexities. Neither is the “wrong” number, and normally they move in the same direction. This one is a bit of a doozy, and tough to get a clear picture until more months of data come in. However, home sales are dropping faster than inventory with the market turning “balanced.” It’s too early for the rate impact to have hit mortgages, so this is likely a psychological impact.