Sales of condos in Toronto drop nearly 15 percent as prices take a major hit in August, data shows

The GTA’s condominium market can’t catch a break as sales and prices took a major hit in August, indicating the Bank of Canada’s two interest rate cuts in the summer had little impact.

 

In Toronto, condo prices dropped six per cent and sales plummeted 14.8 per cent year-over-year, while the suburbs saw a 4.4 per cent decrease in sales and a slight 0.8 per cent drop in price, according to the Toronto Regional Real Estate Board’s (TRREB) Thursday report.

 

Condo sales have suffered as first-time buyers have been priced out of the market and investors have fled due to high interest rates.

 

“A lot of buying activity for the condo sector are first-time buyers who are more sensitive to interest rates,” said TRREB chief market analyst Jason Mercer. “On the demand side affordability has been an issue. But we would expect to see a gradual uptick in demand from first-time buyers as interest rates have begun to drop.”

 

Condo prices have also remained sticky with sellers unwilling to drop asking prices to reflect market value, especially those who bought at pandemic highs and are clinging to hope on making a profit.

The drop in Toronto condo prices of six per cent is partly due to buyers having “a lot of negotiating power,” Mercer said, due to an oversupply of units. As buyers return and supply dries up, investors will likely re-enter the market, he added.

 

The rest of the market continued to struggle in August as homes on average sat on sale for 28 days — a 40 per cent increase compared to the same time last year.

 

“Buyers have more choice and can afford to take longer to get a deal done,” Mercer said.

 

Home sales were down 5.3 per cent in August compared to the same time last year, and decreased by 7.7 per cent compared to July. New listings were up slightly year-over-year and active listings surged by 46.2 per cent, the report said.

 

Historically, the GTA’s real estate market is known for its lack of supply, but there is now plenty of choice. The last time this happened was during the 2008-09 financial crisis and the early months of the pandemic, Mercer said. As interest rates continue to drop, active listings will also decrease, he added.

 

The average selling price was down by 0.8 per cent compared to August 2023 to $1,074,425 — on a seasonally adjusted basis, the average selling price edged lower compared to July.

 

Home prices across all property types in the GTA dropped with detached, semi-detached, townhouse, and condos seeing a 0.3 per cent, 3.9 per cent, 4.6 per cent, and 4.5 per cent decrease, respectively.

 

But the Bank of Canada’s 0.25 percentage-point rate cut on Wednesday will provide relief for prospective homebuyers, especially those looking to buy for the first time, said TRREB president Jennifer Pearce.

 

“First-time buyers are especially sensitive to changes in borrowing costs. As mortgage rates continue to trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market.”

 

As borrowing costs trend lower over the next year-and-a-half, home buyers will initially benefit from both lower monthly mortgage payments and lower home prices, Mercer added.

 

“Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed,” he said. “Ample choice in the market will help keep price growth moderate, at least in the initial phases of recovery.”

 

 

 

 

This article was first reported by The Star