Greater Toronto real estate is slow but new housing has ground to a halt. Altus Group and BILD GTA data shows Greater Toronto has never seen fewer homes sold in July. Prices have dropped significantly from the peak, but not enough to prevent demand from hitting a record low. If a firmer market is ahead, it’s hard to see with a multi-year inventory high and distressed condo investors standing in the way.
Toronto New Home Prices Are Spiraling Lower On Weak Demand
Greater Toronto new home prices have resumed a downturn. The price of a benchmark single-family home fell to $1.59 million in July, falling 18% since the peak. They have rolled back almost two years of progress, stalling recently. However, last month’s slip may be indicating that further downward pressure persists.
Condo apartments have seen demand erode even faster, leaving a bigger price correction. The price of a benchmark condo apartment fell to $1.02 million in July, shedding 22% since the peak. Virtually all of this downward pressure is attributed to record weak demand. New condo prices are roughly where they were in mid-2020, though the sharpest (and frothiest) climb occurred in the years prior due to speculative demand. Still a long way before the exuberance is knocked out of the market.
Source: BILD GTA; Altus Group.
Toronto New Home Sales Fall To A Record Low, 70% Below Average
Demand for new homes at the current price has never been this weak in a usually brisk month. Greater Toronto saw just 654 new homes sold in July, a drop of 48% from last year and 70% below the average. It was the worst July on record, with sales generally weak most of the year—especially new condos.
Year-to-date (YTD) new sales highlight how weak the condo segment is. Buyers scooped up just 3,379 units YTD, down 60% compared to last year. That spiral makes single-family homes look good with 3,326 units sold over the same period, down 15% from last year. It may be worth remembering that a 15-point decline is still massive, and last year wasn’t particularly impressive as a comparison period.
Toronto New Home Inventory Hits An 8-Year High
Greater Toronto’s new homes are also forming a bit of a supply glut. The remaining inventory at month end climbed to 21,660 in July, an increase of 30% compared to last year. New home inventory is now at the highest level since 2016. An 8-year record isn’t too shabby.
Greater Toronto’s new home market is the weakest in at least a generation. It’s a segment of housing largely dominated by investors facing their own hurdles with the inventory they’re taking possession of. Negative cash flow, rising vacancies, and weak secondary market liquidity are becoming more common. It’s likely deterred investors from doubling down and prevented new ones from entering the market.
However, while prices have decreased significantly, they need to fall much further for end-users to re-enter the market.
English (US) · 