The Greater Toronto Area housing market continued to chill throughout July from the scorching conditions seen in March, as sales dipped below 2020 levels for the first time this year. However, many home buyers will still find the market fiercely competitive as the supply of available homes for sale continues to shrink, and sellers’ market conditions prevail in in-demand neighbourhoods.
The July numbers released by the Toronto Regional Real Estate Board (TRREB) reveal a total of 9,390 homes changed hands in the GTA last month, marking a -2% decline from June, and -14.9% from last year. They’re also -40% below the peak observed in March, suggesting that many buyers who didn’t squeeze in an early spring deal have opted to sit out the summer.
However, TRREB notes that the yearly decline in sales activity is in comparison to 2020’s uncharacteristically busy summer market, and that this July can still be considered well above the seasonal norm.
Some Small Price Relief for Home Buyers, but Competition Still Steep
The effect of slowing sales has started to trickle down into price growth; while the average home price is still up 12.6% year over year at $1,062,256, that’s edged down -2.5% from June, and -3.2% from March. The MLS Home Price Index, which measures price growth in the market with the extreme highs and lows stripped out, clocked in at 18% year over year.
While sales and prices are calming, however, so too is seller urgency; the number of newly-listed homes for sale has plunged from 2020 numbers with 12,551 coming to market in July – a 30% decrease. As that’s outpaced the decline in sales, that’s pushed the GTA market deeper into sellers’ territory with a sales-to-new-listings ratio (SNLR) of 74.8%.
This ratio, which is calculated by dividing the number of sales by the number of new listings over the course of the month, measures the level of competition in the market. A range between 40 – 60% indicates a balanced market, with above and below that threshold indicating sellers’ and buyers’ markets, according to the Canadian Real Estate Association. By comparison, the SNLR in July 2020 was 60.8%.
In the City of Toronto, a total of 3,269 homes sold, down -8.4% year over year, while the average price has stayed roughly flat at $1,016,580 (-0.07%). New listings also plunged by -26% in the 416 with 5,108 brought to market, leading to an SNLR of 63.9%.
“The annual rate of price growth has moderated since the early spring, but has remained in the double digits. This means that many households are still competing very hard to reach a deal on a home. This strong upward pressure on home prices will be sustained in the absence of more supply, especially as we see a resurgence in population growth moving into 2022,” said TRREB Chief Market Analyst Jason Mercer in the board’s release.
As has been the trend throughout the pandemic, markets outside of the Toronto core have seen the largest increases in the pace of price growth – Durham Region and South Simcoe County lead all TRREB regions with HPI increases of 31.53% and 31.48% respectively, in contrast to 10.14% in the 416.
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Sales Strongest in Condo Sector
What is evident is that much of the market is being driven by first-time buyers, with the most affordable property types in highest demand. Condos were the only home type to not experience a year-over-year sales decline; a total of 2,614 units sold, up 8.2% from 2020, at an average price of $674,490.
Meanwhile, detached houses continue to experience the largest jumps in price with annual gains of 21.7% to an average of $1,405,478. Sales however are down -26.4% with 4,121 transactions. The average price for a semi-detached house increased 12.2% to $1,027,895 based on 868 sales (-18.5%), while townhouse prices rose 15.9% to $849,950, based on 1,694 transactions (-8.2%).
What’s Next for the GTA Housing Market?
As society re-emerges from COVID-19 lockdowns, it remains an unprecedented time for the GTA housing market – while the second half of the year appears to drop sharply from the first, overall, the market remains very hot from a historic perspective. The strain on supply will only intensify, warns TRREB CEO John DiMichele, as Canada is poised to re-open its U.S. and international borders, ushering in buyers who were absent over the course of the pandemic.
“There is a huge backlog of people seeking citizenship or permanent resident status in Canada. A large share of these newcomers will ultimately choose to call the GTA home,” he states. “This means ownership and rental market conditions will remain tight with upward pressure on prices for the foreseeable future. Policy makers at all levels must pursue a coordinated effort to bring on a greater diversity of supply in major metropolitan areas.”
Check out how July sales and prices have changed from 2020 in the GTA and City of Toronto in the infographics below:
Penelope Graham is the Managing Editor at Zoocasa, and has over a decade of experience covering real estate, mortgage, and personal finance topics. Her commentary on the housing market is frequently featured on both national and local media outlets including BNN Bloomberg, CBC, The Toronto Star, National Post, and The Huffington Post. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods, travelling abroad, or in the dance studio.