GTA Summer Market Showing Signs Of Strength

Toronto area prices were lower in July than in June for all property types, which is completely normal for the summer months. Sales in July were 3% lower than in June, while the total number active listing was 9% lower, and so the inventory of homes for sale dropped to just above 2 months’ supply, indicating a strengthening sellers’ market. This has resulted in sporadic bidding wars across the GTA, particularly for homes under $1 million, where down payments under 10% and CMHC insured mortgages are still possible. (The minimum down payment for homes above $1 million is 20%, and CMHC insurance is not available.) While prices remain somewhat soft overall, we can look forward to a strong rebound in the fall if these conditions continue.

The market for condominium apartments remains exceptionally strong. While average prices have fallen a bit over the past couple of months, they remain well above last year and only slightly below the all-time high reached in May. The fall market, starting after Labour Day, should be very good for condos.

 

 

Prices for freehold (mainly detached & semi-detached) homes fell for the second month in a row, and are tracking very closely the trend lines for the past two years. Assuming this pattern continues, we can expect freehold prices to soften a bit further in August and then bounce back up in the fall, though probably not as high as in the spring.

 

 

All of the above is against a backdrop of slowly declining interest rates, which is the main reason for the market’s relative strength. To the extent that the interest rate trend is a harbinger of economic weakness in Canada and elsewhere, this is good news for the real estate market over the next few months, but maybe not so much beyond that.