Toronto house prices keep climbing but nobody is even buying them
Whether you want to call it an easing, downturn, correction, soft landing, or whatever the buzzword of the week is, Toronto’s ultra-exclusive housing market appears to be experiencing a summer decline.
The Building Industry and Land Development Association (BILD) announced its June figures on Monday, pointing to a continued downward trend in new home sales as prices soar to mesospheric levels.
Only 1,694 new units were sold across the entire Greater Toronto Area (GTA) in June, representing a 56 per cent drop from the previous June’s sales figures, and a 52 per cent dip below the ten-year average for the month.
The majority of June new home sales occurred in the GTA’s condominium market, with 1,519 units sold across low, medium and high-rise buildings, stacked townhouses and loft units.
Despite the condo market dominating housing sales in the region, June’s condo sales marked a 44 per cent year-over-year drop, sitting 36 percent below the ten-year average.
Of course, experts are saying this is no cause for panic, as “new home sales numbers for June reinforced the expected easing of sales from last year’s exceptionally fast pace,” according to Edward Jegg, Research Manager at Altus Group.
“With interest rates continuing to rise, high inflation, affordability pressures and general economic uncertainty, many buyers are adopting a wait-and-see attitude that is expected to run through at least the summer months,” said Jegg.
Despite declining sales in the condo category, benchmark prices for new homes climbed 12.4 per cent since June 2021, reaching $1,189,894.
The most significant changes occurred in the single-family home market segment, with just 175 units sold. This steep decline registers as an 85 per cent year-over-year drop and the same percentage below the ten-year average for June sales.
As much as experts love to complain about an imbalance between supply and demand, figures show that 1,922 single-family lots were on the market in June, representing 2.7 months of inventory. Experts state that a healthy market inventory should hover around 9-12 months.
So there’s little demand and a moderate but not amazing supply, yet the new single-family home benchmark price hit $1,843,595 in June, rising more than 31 per cent year-over-year.
Dave Wilkes, BILD President & CEO, says that economic uncertainty is a factor in these odd market conditions, adding that “shorter-term demand-side economic conditions and inflationary pressures cool demand but increase the costs of new builds simultaneously. This will continue to impact overall supply.”
Wilkes goes on to pressure all levels of government to “ensure we provide the housing supply and choice future generations of GTA residents will need.”