Greater Toronto real estate prices are once again moving lower as investors pull back. Toronto Regional Real Estate Board (TRREB) data revealed prices moved lower in September. It marked the third consecutive month for falling home prices, nearly wiping out gains made after a central bank pause. Despite a new pause, home sales are falling and inventory is rising aggressively—with the market flashing an indicator that traditionally points to lower prices.  

Greater Toronto Real Estate Prices Pull Back For A Third Month 

Greater Toronto real estate prices slipped once again. The TRREB benchmark price fell 1.3% (-$14,400) to $1,112,700 in September. In the City of Toronto, the benchmark dropped 1.0% (-$10,700) to $1,108,600 over the same period. The benchmark remains above last year’s levels, but last month marked the third consecutive decline for prices, nearly wiping out all gains made earlier this year. 

Greater Toronto Real Estate Resumes Down Trend

Need some market context? Greater Toronto’s benchmark price peaked in March 2022, with rate hikes breaking the speculative sentiment. Typically monetary policy takes months to trickle to the market, but exuberance can break as soon as the market thinks it’s over. Any doubt this was the case can be set aside after the BoC “pause” in January of this year. Without any changes to credit markets, speculators returned, pushing prices to reclaim 7 points from the correction.

The sales to new listings ratio (SNLR), used to determine relative demand, fell to just 28.5% in September. Above 60% is a seller’s market, where prices are expected to fall. Between 40% and 60% is balanced, and supply is considered just right for the demand, leading to little movement in price. At just 28.5%, this is well into buyer’s market territory, when prices are expected to fall.

Greater Toronto real estate prices launched higher as investors captured a bigger share of the market. Now with prices no longer driving investor FOMO buying, there’s a gap left where first-time homebuyers used to be. Until prices fall back to their budget or real estate gets another bout of exuberant stimulus, it looks like the market is going to be a slow moving one. 

Greater Toronto Real Estate Sales Are Weak & Inventory Is Suddenly Ripping Higher

Greater Toronto housing demand was supposed to get a boom from population growth, but sales didn’t get that memo. TRREB reported sales fell 12.3% to 4,640 homes in September, about 7% lower than last year. Sometimes sales fall due to a lack of inventory, but that wasn’t the case last month. 

Greater Toronto’s lack of inventory was suddenly resolved with weaker price growth. New listings of homes for sale ripped 36% higher to 16,300 units in September. Compared to last year, new listings were 44.1% higher. The market is incredibly soft, which is good news for buyers—but not so much for anyone trying to sell after buying at peak.  

The sales to new listings ratio (SNLR), used to determine relative demand, fell to just 28.5% in September. Above 60% is a seller’s market, where prices are expected to fall. Between 40% and 60% is balanced, and supply is considered just right for the demand, leading to little movement in price. At just 28.5%, this is well into buyer’s market territory, when prices are expected to fall.

Greater Toronto real estate prices launched higher as investors captured a bigger share of the market. Now with prices no longer driving investor FOMO buying, there’s a gap left where first-time homebuyers used to be. Until prices fall back to their budget or real estate gets another bout of exuberant stimulus, it looks like the market is going to be a slow moving one. 

Better Dwelling(October 4, 2023)