Despite a lack of supply and sales home prices continue to decline

Although the Toronto Regional Real Estate Board (TRREB) uses the term “support” a lot in its latest press release outlining the new housing market report, the reality is that home prices continue to decline as they have since the spring. One question might be if supply increased or other economic conditions changed, just how far would prices fall or how quickly would they rebound? Although expert opinions offer a range of possible outcomes, the vast majority indicate a major correction is underway that will continue well into 2023.

TRREB indicated that there were 4,961 sales in October, which is down 49.1 per cent compared to one year ago, and a similar number to September 2022.

New listings are down by 11.6 per cent when compared to last October and currently sit at a level not seen since 2010. According to TRREB, listings are down on an annual basis “more so for mid-density and high-density home types, which helps to explain why prices have held up better in these categories compared to detached houses.”

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order,” said TRREB President Kevin Crigger. “Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households.”‘

According to TRREB, its own Home Price Index was down 1.3 per cent from last October, while the average selling price is down 5.7 per cent to $1,089,428.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,” said TRREB Chief Market Analyst Jason Mercer.

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