As the Bank of Canada raises interest rates and sends signals that further increases are imminent, it appears that the hot real estate market in Canada’s largest city is finally cooling.
“We’re starting to see significant declines in some communities with more than 20 percent for detached homes in the Greater Toronto (GTA) area,” said Michael Carney, director of business development at HouseSigma.
HouseSigma is a website that tracks property values and market trends and said its latest data on home price sales from February 1, 2022 to April 19, 2022 show that there is evidence that prices are falling of real estate.
According to the latest GTA housing prices, detached homes sold in February sold at an average price of 12.1% lower in April, falling from $ 1.65 million to $ 1.45 million.
Two-family homes fell 13.5 percent over the same period from $ 1.33 million to $ 1.15 million, with the biggest drop in free-home townhouses selling 22.6 percent less than $ 1 million. , $ 24 million to $ 960,000.
Condominiums have the smallest decline of 6.8 percent, falling from $ 740,000 to $ 690,000.
HouseSigma has found that price-raising bidding wars are less common and more and more homes are being removed and removed from the market.
“What we are seeing is a correction from the months of February, but I would say that the foundations of the GTA are still very strong,” Carney said.
Although no one is saying that this is the beginning of a major collapse, the fall in prices is significant as more and more potential buyers take a wait-and-see approach to real estate.
“Between February and March, we saw a moderate reduction in the average selling price for GTA, and that’s in all types of housing,” said Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board (TRREB).
TRREB will release its own data on house prices next week, but it said when the Bank of Canada raised interest rates last month and signaled more increases later this year, it has a cooling effect on house prices.
“If we look back at past Bank of Canada interest rate tightening cycles, we found that once Bank of Canada starts raising interest rates, it really does reduce sales as people reposition themselves in the market,” Mercer said. .
TRREB said housing prices are still rising in double digits from the previous year and that although there may be reductions from month to month, immigration, high employment and lack of housing means that GTA housing prices are likely to rise. remain high in the long run.
When it comes to real estate, it’s about location, so in some areas there is a smaller drop in prices than in others. As more people return to the office in downtown Toronto, downtown prices are more likely to remain the same.
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