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Housing market shifting, Toronto-area home sales down 44% from year ago

TORONTO — Home sales plummeted in the region of Canada's largest city last month, down 44 per cent from last September and 10 per cent from the previous month at a time when the typically busy fall real estate season is usually getting started.
A for sale sign is shown in front of west-end Toronto homes Sunday, April 9, 2017. The Canadian Real Estate Association is cutting its forecast for home sales this year and lowering its expectations for price growth. THE CANADIAN PRESS/Graeme Roy

TORONTO — Home sales plummeted in the region of Canada's largest city last month, down 44 per cent from last September and 10 per cent from the previous month at a time when the typically busy fall real estate season is usually getting started.

That downward trend was repeated in other major cities, with September sales dropping 46 per cent year-over-year and 10 per cent from August in the greater Vancouver region. In Montreal, September home sales dropped to their lowest level since 2013. 

And new listings in Toronto dropped to their lowest level for the month in 20 years, the Toronto Regional Real Estate Board said Wednesday.

The numbers mark a continuation of a market cooldown that has already put a damper on bidding wars and discouraged some sellers from listing their properties at all because they likely won't fetch as much money as their neighbours did at the start of the year, when the market was moving at a torrid pace.

Things are generally much calmer, said Cailey Heaps, president of the Heaps Estrin Real Estate Team in Toronto.

"We aren't seen that frenzy and that pressure that we agents, clients and everyone was dealing with in the early part of the year, so it's a more balanced approach, where people are taking time."

She's noticed a "catch-22" playing out, where sellers hear stories of a market cooldown so they hold off listing their properties, further fuelling the downturn. 

But that doesn't mean buyers have all the power.

"I wouldn't say that we're in a buyer's market at this point, but I think we could say perhaps we're in a more balanced market right now," said Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd.

She said she has colleagues whose clients have ended up in bidding wars recently that ended with the sellers deciding to relist the house at another price because they didn't like what they were being offered.

Some of that sentiment contributed to the region reporting 11,237 new listings, an almost 17 per cent drop from a year ago and the lowest number for the month since 2002. 

The fall in new listings was coupled with the composite benchmark price reaching $1,086,762, a 4.3 per cent dip from last year, but an almost one per cent rise from August.

Heaps still sees some sellers pricing their homes as if it were months ago, when the market was roaring.

"But those people who are realistic about pricing and sort of forget the first five months of 2022 and price to today's market, in the central core of Toronto, those properties are selling," she said.

The cooler market is also triggering some mind games for buyers.

"Buyers like a house and they want to go after the house, but ... they're embarrassed to buy in a market that might be changing further," she said.

"But as soon as someone else offers or if someone else expresses strong interest, then they're willing to enter the market."

The result means smaller bidding wars are happening several weeks into a listing being on the market, Heaps said.

However, many of Morrison's clients are taking the opposite approach.

"I've got buyers who, if somebody else offers, they don't want offer on it, because they feel like it's just not the time for bidding wars," she said.

"It immediately turns them off."

Average prices were highest in the 905 area — part of the GTA encompassing suburban regions like Vaughan and Durham — where they totalled $1,099,938. In the 416, a nickname for the City of Toronto that excludes its suburbs, the average price was $1,061,876.

Across all the areas studied by TRREB, average prices of detached homes fell 10 per cent year-over-year to $1,369,186, semi-detached properties dropped by 6.5 per cent to $1,043,120 and townhouses edged down by almost one per cent to $901,592. Condos, however, rose by roughly three per cent to $730,818.

"October generally represents the peak of the fall market, so it will be important to see where price trends head over the next month," TRREB's chief market analyst, Jason Mercer, said in a news release.

The year-over-year fall in overall prices that the GTA saw was mirrored in Montreal, where the Quebec Professional Association of Real Estate Brokers reported average prices for single-family homes rose six per cent to $535,000, while condos rose four per cent to $380,000 and plexes dropped one per cent to $685,000.

Meanwhile, the Real Estate Board of Greater Vancouver said Tuesday that the composite benchmark price reached $1,155,300 last month. That price was up 3.9 per cent from last September but down 2.1 per cent from August.

"Although Vancouver is one of the priciest cities in the world, look for broadly similar trends to unfold in many other Canadian markets that thumbed their nose at affordability when borrowing costs were three points lower than today," BMO Capital Markets senior economist Sal Guatieri said in a Tuesday note to clients.

Similar to Toronto, the Vancouver board also said home sales in September dropped by 46 per cent since last year and 10 per cent from August as interest rate increases cooled buyer sentiment. 

The sales for the month were almost 36 per cent below the 10-year September sales average.

This report by The Canadian Press was first published Oct. 5, 2022.

Tara Deschamps, The Canadian Press