TORONTO — The Greater Toronto Area housing market is becoming more balanced as May home sales dropped 39 per cent from a year earlier and prices rose almost 10 per cent, the Toronto Regional Real Estate Board said Friday.
The Ontario board found last month's home sales totalled 7,283, down from 11,903 in May 2021 and 7,989 this past April.
The board and brokers attributed the drop in sales to higher borrowing costs that materialized because of interest rate hikes and were coupled with inflationary pressures that weighed on spending.
However, they found buyers had more negotiating power last month as the market started to balance out.
"The activity has slowed and in some places, close to a halt," said Natalie Lewin, a Toronto agent with Re/Max Hallmark Realty Ltd.
"Interest rates are weighing on them and … a lot think that the prices are going to drop a lot further and they're holding out for that. It appears that it's going towards a buyer's market, so they're not anxious to make a decision now."
In recent weeks, realtors have noticed the pace of sales is not as torrid as it was at the start of the year. Many sellers now garner fewer offers and bidding wars for their home, pushing some to accept a lower price than they may have seen months ago.
The average home price hit $1,212,806 in May, up more than nine per cent from $1,108,124 during the same month last year.
However, the average home price was still lower than $1,253,567 in April, the third consecutive month where the market experienced a drop.
"Buyers are sitting on the sidelines right now and trying to take stock of what's really happening," said Lewin.
"Their decisions are taking a lot longer than they have in previous years."
Where earlier this year properties were snatched up as soon as or not long after being listed, Lewin has seen many sit for weeks and even months.
She listed a property in Brampton for about $749,000 in a neighbourhood where homes were marketed for about $900,000 before. It has sat for two months.
"We're not getting any action. It's pretty much like crickets," she said. "And it's a great neighbourhood and it shows well."
She's seen similar a reaction with a renovated condo in Toronto she listed.
The average price of a detached home in the city of Toronto, which is linked to the 416 area code rose by 12 per cent since last year to hit more than $1.9 million in May, while semi-detached properties increased by about eight per cent to reach more than $1.4 million.
Townhouses were up by roughly 10 per cent to total slightly more than $1 million, while condos also saw a 10 per cent increase to an average $793,000.
Detached homes were up about eight per cent to more than $1.4 million in the 905, an area surrounding Toronto that includes municipalities such as Vaughan, Mississauga and Brampton.
Semi-detached properties and townhouses in the area were up by 14 per cent each to reach more than $1 million and $950,000 respectively.
Condos in the 905 saw 20 per cent growth to an average $722,000.
"There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer," Kevin Crigger, TRREB's president, predicted in a release.
His board also found the number of homes people had to choose from was little changed from a year ago. May saw 18,679 new listings, while 18,593 properties hit the market during the same month in the year prior.
BMO Capital Markets' chief economist Doug Porter interpreted the month's numbers as a sign of a cooling market, but warned the rapid rise in rates recently is "a clear and present danger to the teetering housing market."
"The pullback in sales has now gone far beyond simply reversing the outsized strength a year ago, and is now in well-below-average terrain, with inventories building quickly," he wrote in a note to investors.
"We can’t help but wonder how loud the cries for 'more supply' will be in the months ahead amid fading sales and swelling listings."
This report by The Canadian Press was first published June 3, 2022.
Tara Deschamps, The Canadian Press