Home sales and prices continue to drop in Toronto region
The Canadian Real Estate Association (CREA) has lowered its annual forecast as home sales and prices continued to decline in May, largely as a result of rising interest rates that have pushed up mortgage rates faster than expected.In March, the association had been predicting a 14.3 per cent price increase in the average price of Canadian homes this year. It is now expecting an annual increase of 10.8 per cent to $762,386.Ontario is still forecast to gain 17.1 per cent bringing the average home cost to $1.02 million. In 2023, CREA is calling for another 5.4 per cent growth to $1.08 million on average.“Prices have been halted in their tracks following a record setting five months of growth between October 2021 and February 2022,” said a CREA press release on Wednesday.The real estate association has also reduced its sales forecast from 612,800 transactions to 568,288 for this year.The revised lookahead follows a nine per cent month-over-month decline in sales and a 22 per cent annual decline from last May’s record levels across the country. Like the Toronto region, sales were down in three-quarters of Canadian markets, including other large metropolitan areas such as the Ottawa, Lower Mainland, B.C., Edmonton and Calgary.Prices also dipped across the country by 0.8 per cent between April and May, following a 1.1 per cent month over month decline in April.But the average home price in Canada still rose on an annual basis in May, up 3.4 per cent to $711,000, led by the country’s most expensive market in the GTA and Vancouver. Without those two markets, the average would be $122,500 less — $588,500.Toronto region home prices, including all houses and condos, averaged $1.21 million in May, a $121,000-drop from the February market peak of $1.33 million.CREA senior economist Shaun Cathcart warned that “two months is not a trend,” and month-over-month statistics “can jump all over the place.”It’s likely, however, the annual price increases the Canadian market has seen so far this year will get smaller as the months go on. “We’re not expecting prices to really rise much at all from this point. Even if things get stopped in their tracks you’re going to have gains for a while,” said Cathcart.Despite this spring’s downturn, many Canadian markets, including the GTA, are a long way from balanced because housing inventory levels have not yet fully recovered from the record lows of late last year and early this year, he said.Inventory is starting to be rebuilt but it’s got a long way to go to get back to the long-term average of five months of supply. The Toronto region is behind the national average with two months’ inventory, said Cathcart.“For Canada overall, we’re at 2.7 months (inventory), which is only half of what balanced would be. Sales can go down and they can stay at more normal levels but it’s going to take quite some time for overall listings on the market to build itself back up,” he said.But the market isn’t contracting everywhere. While most Ontario markets experienced average month over month price drops, prices in cottage areas in the northern, southern and eastern parts of the provinces were up.That’s likely due to a long-standing shortfall of supply in those areas where inventory was completely absorbed during the pandemic. Cathcart says higher interest rates will eventually hit those markets too.Prices held steady in the Maritimes too, largely because of the relative affordability of homes there. Many homeowners on the east coast aren’t close to their borrowing limits, unlike those in more expensive markets such as Toronto and Vancouver. As well, migration from other parts of the country continues to push up home prices there where young buyers are now struggling to compete with arrivals from Ontario, who have cashed out the higher value of their homes, he said. CREA forecast for next year includes a modest 3.1 per cent price increase to $786,282 on average and a further 28 per cent reduction in home sales to 552,403 transactions.
Tomas Kauer - Moderator 
The Canadian Real Estate Association (CREA) has lowered its annual forecast as home sales and prices continued to decline in May, largely as a result of rising interest rates that have pushed up mortgage rates faster than expected.
In March, the association had been predicting a 14.3 per cent price increase in the average price of Canadian homes this year. It is now expecting an annual increase of 10.8 per cent to $762,386.
Ontario is still forecast to gain 17.1 per cent bringing the average home cost to $1.02 million. In 2023, CREA is calling for another 5.4 per cent growth to $1.08 million on average.
“Prices have been halted in their tracks following a record setting five months of growth between October 2021 and February 2022,” said a CREA press release on Wednesday.
The real estate association has also reduced its sales forecast from 612,800 transactions to 568,288 for this year.
The revised lookahead follows a nine per cent month-over-month decline in sales and a 22 per cent annual decline from last May’s record levels across the country. Like the Toronto region, sales were down in three-quarters of Canadian markets, including other large metropolitan areas such as the Ottawa, Lower Mainland, B.C., Edmonton and Calgary.
Prices also dipped across the country by 0.8 per cent between April and May, following a 1.1 per cent month over month decline in April.
But the average home price in Canada still rose on an annual basis in May, up 3.4 per cent to $711,000, led by the country’s most expensive market in the GTA and Vancouver. Without those two markets, the average would be $122,500 less — $588,500.
Toronto region home prices, including all houses and condos, averaged $1.21 million in May, a $121,000-drop from the February market peak of $1.33 million.
CREA senior economist Shaun Cathcart warned that “two months is not a trend,” and month-over-month statistics “can jump all over the place.”
It’s likely, however, the annual price increases the Canadian market has seen so far this year will get smaller as the months go on.
“We’re not expecting prices to really rise much at all from this point. Even if things get stopped in their tracks you’re going to have gains for a while,” said Cathcart.
Despite this spring’s downturn, many Canadian markets, including the GTA, are a long way from balanced because housing inventory levels have not yet fully recovered from the record lows of late last year and early this year, he said.
Inventory is starting to be rebuilt but it’s got a long way to go to get back to the long-term average of five months of supply. The Toronto region is behind the national average with two months’ inventory, said Cathcart.
“For Canada overall, we’re at 2.7 months (inventory), which is only half of what balanced would be. Sales can go down and they can stay at more normal levels but it’s going to take quite some time for overall listings on the market to build itself back up,” he said.
But the market isn’t contracting everywhere. While most Ontario markets experienced average month over month price drops, prices in cottage areas in the northern, southern and eastern parts of the provinces were up.
That’s likely due to a long-standing shortfall of supply in those areas where inventory was completely absorbed during the pandemic. Cathcart says higher interest rates will eventually hit those markets too.
Prices held steady in the Maritimes too, largely because of the relative affordability of homes there. Many homeowners on the east coast aren’t close to their borrowing limits, unlike those in more expensive markets such as Toronto and Vancouver. As well, migration from other parts of the country continues to push up home prices there where young buyers are now struggling to compete with arrivals from Ontario, who have cashed out the higher value of their homes, he said.
CREA forecast for next year includes a modest 3.1 per cent price increase to $786,282 on average and a further 28 per cent reduction in home sales to 552,403 transactions.
