Housing markets in Toronto and Vancouver weakened further in July, with home sales and prices falling for another month as mortgages become more difficult to get and buyers wait to see how low prices can go. In the Toronto area, home resales fell 47 per cent in July compared to the same month last year and were down 7.3 per cent from June on a seasonally adjusted basis, according to the Toronto Regional Real Estate Board (TRREB). In the Vancouver area, resales fell 43 per cent year over year and were 23 per cent lower than in June, according to the Real Estate Board of Greater Vancouver. Home prices also continued to fall in the nation’s two most expensive markets. The home price index, which adjusts for the high end of the market, fell for the fourth straight month in the Toronto area. The typical home price was $1,157,500 in July, down 13% from the peak in March and marking the biggest four-month decline since the turn of the century. In the Vancouver area, home prices fell for the third month in a row to $1,207,400. That’s down 12 percent from the Vancouver market’s peak in April. “Prices are falling across the board,” said Brendon Cowans, vice-president of sales for Property.ca, a Toronto-based brokerage. In the Toronto area, the home price index fell 4 per cent from June to July, with the largest falls outside the city. Home prices fell quickly in areas that experienced wild price increases in the first two years of the pandemic. That includes Halton, west of Toronto, where the home price index fell 6 per cent from June to July. Toronto developers expected to delay 10,000 units as slowdown hits condo presales In the Vancouver area, the typical home price fell by 2.3% over the same period. A typical single-family home fell 2.8 percent to $2,000,600 from June to July. Semi-detached homes fell 1.7 percent to $1,096,500 over the same period, and apartments fell 1.5 percent to $755,000. Mr. Cowans said the market has moved in favor of buyers and he expects prices to continue to decline as the Bank of Canada raises interest rates to help slow inflation. Farah Omran, an economist at the Bank of Nova Scotia, said more people now expect prices to fall. “Buyers are increasingly feeling less rushed and waiting for cheaper prices,” he said in a recent research note. As a result, homes take longer to sell. In the Toronto area, active listings have grown by 58 per cent over the past year. In the Vancouver area, listings are up 4 percent year-over-year. The central bank’s benchmark interest rate is now 2.5 percent compared with 0.25 percent in early March. This has pushed up borrowing costs for homeowners with variable rate mortgages and made it more difficult for would-be buyers to qualify for a loan. Prospective homebuyers must demonstrate that they could make their mortgage payments at an interest rate that is at least 2 percentage points higher than their mortgage rate. With the popular five-year fixed rate near 5 percent, that means borrowers have to show they can make their payments at an interest rate of around 7 percent. TRREB said that this wild increase in lending rates changed the mood in the market. Board chairman Kevin Crigger urged the federal government to reassure homeowners that they will be able to stay in their homes despite rising borrowing costs. “The federal government has a responsibility not only to maintain confidence in the financial system, but to inspire confidence in homeowners,” he said in a news release. The council urged policymakers to consider extending the payback period for mortgages to 40 years from the current 25. Overall, property values are still higher than a year ago. In the Vancouver area, the typical price of a home increased by 10 per cent year over year. In the Toronto area, the home price index was 13 per cent higher. Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox morning or night. Sign up today.
