Toronto’s housing market has officially entered a bear market.
Prices for detached homes in the Greater Toronto Area continue to fall, cooling from a peak of $1,214,422 in March 2017 to $968,494 in August. This marks the first time since September 2016 that detached home prices are less than $1,000,000.
According to the Toronto Real Estate Board, the average price of all homes sold in the GTA in August was $732,292, a fall of 20.5% since its peak price of $920,71 in April. When an asset falls 20% or more in value, economists label it as being in a “bear market.”
August’s decline continues the trend we’ve seen since the Ontario government unveiled a set of new policies designed to cool the province’s hottest housing markets. The decline has nearly erased year-over-year home price gains in Toronto — prices are now up only 3% in the past 12 months. Compare that to April, when y-o-y gains sat at a blistering 24.5%.
Dropping prices were accompanied by a big drop in sales activity. Realtors reported 6,357 sales in August, down 34.8% from the year before. New listings were also down 6.7%. On average, listings are now spending a week longer on the market than August 2016 (25 days on market versus 18 days on market in 2016).
Despite the decline in average home price, the MLS benchmark price, which factors in the most common types of homes sold in a region, is still up 14.3% year-over-year. The reason for this is that fewer ultra-expensive luxury homes have been sold in recent months. Prices for those homes have fallen harder than other types of housing.
One area where activity remains strong is condos. Buyers are turning to condos in droves for affordable new houses, and demand for more has never been higher. Prices for GTA condos, according to TREB, are up 21.4%. The average price for a unit in August sat at $507,841 — a rise from the $501,750 they sold for in July.. Bidding wars for units in trendy neighbourhoods are making sellers tidy profits, even on units that are rumoured to have bed bugs.
Of course, it remains to be seen how home prices react to rising interest rates. The Bank of Canada hiked its benchmark rate again Wednesday, bringing it to 1%. The last hike in July is credited with helping to depress sales and prices.