Toronto Market Leveling Off?

Toronto area prices fell for the 4th month in a row, with average prices for all property types now about 3% ahead of last August. Prices for detached homes have now retraced all the way back to the 2016 level, while prices for condo apartments, surprisingly, remain more than 20% above last year. Affordability is likely one of the main reasons for the resilience of the condo market, as it has become increasingly difficult for buyers to qualify for mortgages above $500,000 and especially over $1,000,000, where mortgage insurance is not available.




On the positive side, the inventory of homes for sale dropped in August by about 20% from 3.2 to 2.6 months’ supply, back into ‘sellers’ market’ territory. While the number of homes sold remains lower than last year, and the number of homes for sale remains higher, this suggests that house prices could level off and even bounce upward over the next 2-3 months as we move into the normally strong fall market. A lot will depend on whether large numbers of sellers have been holding off on listing their homes for sale, hoping that the fall market will improve; as well as on whether buyers have yet become convinced that prices have stopped falling. Also,the fact that the Bank of Canada increased interest rates by 0.25% this week (matched immediately by the banks) won’t help to prop up the market. The next 3-4 weeks will likely reveal whether we will have a modest fall rally or a continued downtrend.