Prices of detached houses plunge C$207,000 from a year ago as sales collapse.
After having ballooned for 18 years with barely a dip during the Financial Crisis, Toronto’s housing market, Canada’s largest, and among the most inflated in the world, is heading south with a vengeance, both in terms of sales volume and prices, particularly at the high end.
Home sales in the Greater Toronto Area (GTA) plunged 39.5% in March compared to a year ago, to 7,228 homes, according to the Toronto Real Estate Board (TREB), the local real estate lobbying group. This was spread across all types of homes, even the formerly red-hot condo sector:
- Detached houses -46.3%
- Semi-detached houses -30.6%
- Townhouses -34.2%
- Condos -32.7%.
While new listings of homes for sale fell 12.4% year-over-year, at 14,866, they’d surged 41% from the prior month, and added to the listings of homes already on the market. The total number of active listings – new listings plus the listings from prior months that hadn’t sold or been pulled without having sold – more than doubled year-over-year to 15,971 homes, and were up 20% from February.
At the current sales rate, total listings pencil out to a supply of 2.1 months. The average days-on-the-market before the home is sold or the listing is pulled without having sold doubled year-over-year to 20 days. Both data points show that the market is cooling from its red-hot phase, that potential sellers aren’t panicking just yet, and that potential buyers are taking their time and getting more reluctant, or losing their appetite altogether, with the fear of missing out (FOMO) having evaporated.
Sales volume has been plunging for months while listings of homes for sale have also surged for months. Prices follow volume, and prices have been backing off, but in February they actually fell on a year-over-year basis, the first since the Financial Crisis, and in March, they fell more steeply. This is what the report called a “change in market conditions.”
The average price for the Greater Toronto Area (GTA) plunged 14.3% year-over-year to C$784,588. In other words, the average buyer in March a year ago is now about C$130,000 in the hole.
The average year-over-year price decline for the GTA split up this way:
- City of Toronto: -8.9% to C$817,642 or down C$80,000.
- Rest of the GTA without Toronto: -17.4% to C$763,674 or down C$160,000.
But different types of homes were affected differently, with the average price of the most expensive type of homes, detached houses, taking a massive 17.1% or C$207,000 year-over-year hit:
- Detached houses -17.1% to C$1,005,779.
- Semi-detached houses -8.8% to C$782,831
- Townhouses -9.5% to C$638,558
- Condos +6.1% to C$551,003
Condo prices are still gaining, though at a declining rate, as the plunge in sales volume is gradually catching up with pricing.
The average price was also impacted by the market freezing up at the high end: Sales volume of houses costing over C$2 million, according to the TREB, plunged by half year-over-year.
In addition to these average prices, the TREB offers its own proprietary “Home Price Index Composite Benchmark” (but it doesn’t disclose median prices). This index is fairly resistant to price declines, but it nevertheless fell 1.5% year-over-year for the GTA.
Real estate website Zolo.com offers all kinds of housing data, including median prices. And the median price for all types of homes in the GTA in March dropped 12% year-over-year.
The TREB report tries to put the debacle of declining home prices into perspective:
Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months. It makes sense that we haven’t seen prices climb back to last year’s peak.
But there’s always hope that needs to be propagated to keep the bubble going somehow:
However, in the second half of the year, expect to see the annual rate of price growth improve compared to Q1, as sales increase relative to the below-average level of listings.”
Then there are the lobbying efforts. Policy makers and regulators at federal and provincial levels have been trying for the past year to cool the various local housing bubbles, particularly in the GTA and in Vancouver, which reached such proportions that they not only price out new generations of Canadian buyers but also put the financial system at risk.
But the TREB doesn’t care about that. It wants those efforts reversed and says that “often inadvisable policy ideas and negative measures” that have already been implemented, “such as land transfer taxes, vacancy taxes, speculation taxes and second home taxes should also be thoroughly debated by all candidates,” after they’d already been thoroughly debated and passed by the legislatures and regulators under intense pressure from nothing other than the stark reality and risks of an immense housing bubble.
And here is an update on the most splendid housing bubbles in the US, where some flat spots are disappearing and new ones are forming. Read… Update on the Most Splendid Housing Bubbles in the US