The latest report shows that the housing inventory in the Greater Toronto Area surged in April, while sales volume declined. However, prices remained stable, with a slight increase compared to the previous month. Some believe that after the central bank cuts interest rates, housing prices will rise, and people are eagerly awaiting the Bank of Canada’s decision in June.
According to the latest report released by the Toronto Regional Real Estate Board (TRREB), the MLS system recorded a less than 1% year-over-year decrease in the Housing Price Index (HPI) composite benchmark price; meanwhile, the average selling price increased by 0.3% to $1,156,167. After seasonal adjustments, both the benchmark price and average selling price saw month-over-month growth, with the benchmark price rising by 0.4% compared to March and the average selling price increasing by 1.5%.
It is apparent that the increase in housing prices in April compared to the previous month is not due to increased competition. According to the data from the real estate board’s report, there were only 7,114 housing transactions in April, a 5% decrease from the previous year. Except for April 2020 when there was a lockdown due to the COVID-19 pandemic, this April marked the weakest sales performance for the month in the past decade.
When breaking down by different property types, detached houses saw a 7.2% year-over-year decrease in sales, semi-detached houses dropped by 1.0%, and condominiums decreased by 6.5%. In contrast, townhouses experienced a 0.7% increase in sales volume.
The decline in sales volume cannot be attributed to a lack of options. The number of newly listed properties for sale in April skyrocketed by 47.2% year-over-year to 16,941 units. This led to the Sales-to-New Listings Ratio (SNLR) dropping to 41%, indicating a market on the verge of favoring buyers, which means that there is downward pressure on prices.
Jennifer Pearce, the CEO of the Toronto Real Estate Board, stated in a press release, “Compared to the same period last year and the previous month, the number of new property listings in April saw a significant increase. Many homeowners anticipate an increase in demand in the spring market. Although sales are expected to rebound, many potential homebuyers may be waiting for the Bank of Canada to lower interest rates before making a purchase.”
Amidst the record-low sales volume in the past ten years (excluding the pandemic lockdown period) and a significant increase in inventory, the abnormal trend of rising prices has led some industry insiders to speculate that a small group of buyers is attempting to “beat the clock” before the central bank reduces interest rates. They believe that a rate cut would trigger a surge in housing prices, making it too late to purchase a home at that point.
Jason Mercer, the Chief Market Analyst at the Real Estate Board, stated, “In general, the resale housing market in the Greater Toronto Area in April provided ample choices for buyers. Compared to last year, sales prices have remained relatively stable. Looking ahead, the expected decline in borrowing costs will tighten market conditions in the coming months, leading to a price resurgence, especially as we approach 2025.”
With economists predicting a slowdown in the economy in the second quarter of this year, all eyes are on the Bank of Canada’s next interest rate announcement scheduled for June.
Regardless of whether there is a rate cut, as emphasized in the real estate board’s report, efforts are needed to enhance people’s affordability and choices in housing.