In the Vancouver area, the typical price of a home was down 2.3 per cent from June to July.JENNIFER GAUTHIER/The Globe and Mail
Real estate markets in Toronto and Vancouver tumbled further in July, with sales and home prices declining for another month as getting mortgages becomes more difficult and buyers wait to see how low prices can go.
In the Toronto region, home resales dropped 47 per cent in July compared with the same month last year, and were down 7.3 per cent from June on a seasonally adjusted basis, according to the Toronto Regional Real Estate Board (TRREB). In the Vancouver area, resales declined 43 per cent year over year and were 23 per cent lower than June, according to the Real Estate Board of Greater Vancouver.
Home prices also continued to fall in the country’s two most expensive markets.
The home price index, which adjusts for the high end of the market, fell for the fourth straight month in the Toronto region. The typical price of a home was $1,157,500 in July, down 13 per cent from the peak in March and marking the largest four-month decline since the turn of the century.
In the Vancouver area, home prices eased for the third consecutive month to $1,207,400. That is 12 per cent lower than the top of the Vancouver market in April.
“Pricing is dropping across the board,” said Brendon Cowans, vice-president of sales for Property.ca, a Toronto-based brokerage.
In the Toronto region, the home price index was down 4 per cent from June to July, with the sharpest drops outside the city. Home prices have declined quickly in areas that experienced frenetic price increases in the first two years of the pandemic. That includes Halton, to the west of Toronto, where the home price index fell 6 per cent from June to July.
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In the Vancouver area, the typical price of a home was down 2.3 per cent over the same period. A typical detached house fell 2.8 per cent to $2,000,600 from June to July. Semi-detached houses fell 1.7 per cent to $1,096,500 over the same period and condos were off by 1.5 per cent to $755,000.
Mr. Cowans said the market has moved in favour of buyers and he expects prices to continue to decline as the Bank of Canada raises interest rates to help slow inflation.
Farah Omran, an economist with Bank of Nova Scotia, said more people now expect prices to drop. “Buyers are increasingly feeling less rushed and are holding off for cheaper price tags,” she said in a recent research note.
As a result, homes are taking longer to sell. In the Toronto region, active listings increased 58 per cent over the past year. In the Vancouver area, the volume of listings is up 4 per cent year over year.
The central bank’s benchmark interest rate is now 2.5 per cent compared with 0.25 per cent in early March. That has pushed up borrowing expenses for homeowners with a variable mortgage rate and made it harder for would-be buyers to qualify for a loan.
Prospective homebuyers must prove they could make their mortgage payments at an interest rate that is at least 2 percentage points higher than their mortgage rate. With the popular five-year fixed rate near 5 per cent, that means borrowers must show they could make their payments at an interest rate of around 7 per cent.
TRREB said this wild increase in lending rates has changed the sentiment in the market. Board president Kevin Crigger urged the federal government to reassure homeowners they will be able to stay in their homes despite the rising cost of borrowing.
“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners,” he said in a news release. The board urged policy makers to consider lengthening the mortgage amortization period to 40 years from the current 25 years.
Overall, property values are still higher than a year ago. In the Vancouver area, the typical price of a home was up 10 per cent year over year. In the Toronto region, the home price index was 13 per cent higher.
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