TRREB’s June GTA Data.
Toronto, July 6th, 2022
By Ivan Kalinin
Amid the rising interest rates, supply chain disruptions as well as talks about the economy heading into a recession, the Toronto house prices have been on decline in June. The price adjustments are most visible in comparison with the earlier months of this year. While year-over-year average selling price is still up 5.3%, it has dropped a whopping 14% since February 2022, which represented the all-time high.
The change becomes even more significant when looking at the average Toronto house price of $1,146,254, compared to $1,334,544 in February. The sales have dropped by 41% from the same time last year, which is not surprising given the uncertainty that is currently present in the market. The anticipation of further rate hikes also plays a role here. Buyers that are able to afford a higher interest rate payments decide to wait for the prices to bottom out more in the following months.
This means that we may see an uptick in demand in the fall months when some of these buyers decide to re-enter the market. The rest of the summer is expected to continue with the current trend, where the listings take longer to sell while new inventory is making its way to the market.
Toronto house prices and sales are on the decline – what does it mean for buyers and sellers?
The declining Toronto house prices can be interpreted differently by buyers and sellers. Let’s try and interpret what this means for each side.
For the buyers, the current situation presents a clear opportunity to purchase a property in Toronto and the GTA at a lower price with less competition. But, timing the market in these cases is not recommended, there are deals to be made everywhere as we speak, while there is no certainty as to how long the current market conditions will last. While the subsequent interest rate hikes are expected, they are not guaranteed after all.
The current inflation and the countermeasures deployed by the Bank of Canada are taking its toll on the economy, but eventually it will have to adapt. Once that happens, the market is expected to return to its normal levels, but perhaps at a slower and steadier price trajectory. Pent up demand is a real thing in hot markets such as Toronto and the GTA. People still need to move after all and the rental market is scolding hot at the moment, with rental listings receiving multiple offers. With the rising rental rates and lower purchasing prices, people will be more inclined to put their monthly rental payments toward home ownership.
In other words, the drop in the Toronto house prices is expected to encourage a new wave of buyers to enter the market, which might put an end to this window of opportunity that the buyers currently find themselves in.
For the sellers, obtaining a price valuation on your home before listing the property for sale is essential for the success of the listing. Not only this will help to sell the home at a higher price, it will also help selling the home faster.
Digital marketing is another essential piece of the equation. Many listings still feature photos taken with a cell phone and without proper lighting. Investing in a professional photographer is a great way to make your listing pop from the rest. This is especially important now that there is a larger supply of listings on the market and buyers are leafing through dozens of them to find the one they like.
Online advertising is also an important piece of marketing strategy. Exposing the listing to more potential buyers that perhaps missed the listing on the common real estate websites, is a good way to get an edge while selling your home.
Finally, offline marketing such as street signage, open houses and flyers can play a big part in selling your home in a slower market.
While the short term effect of the rising interest rate hikes is being felt by the economy and the real estate market, the demand is piling up as the buyers waiting for the right moment to re-enter the market. We can rest assured that the market will sort itself out in due course, but until then those looking to purchase a property can and will benefit from the great opportunity that is currently presenting itself to them.
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Ivan Kalinin is a sales agent at Key Toronto Real Estate Group. Zoocasa Realty Inc. – Brokerage independently owned and operated, He can be reached at 416 858 8085. Not intended to solicit clients already under contract.