By Murtaza Haider and Stephen Moranis
June sales data from Toronto and Vancouver, two of Canada’s most dynamic housing markets, indicate a struggle with sales and prices. Traditionally, early summer is a period of robust activity in housing markets. This year, however, prospective homebuyers remain cautious and hesitant, while sellers are flooding the market with new listings.
Canadian real estate markets have struggled since interest rates began to rise in early 2022, resulting in higher mortgage payments for new buyers and those renewing their mortgages. The recent 25-basis-point cut in the prime rate has fostered optimism in the markets, but was not enough to motivate sidelined buyers, who might be anticipating further rate cuts and waiting until they reach their lowest levels in the current cycle.
This strategy has its pros and cons. Securing a mortgage at a lower rate can often be offset by rapidly rising prices, which tend to increase as interest rates decline.
A review of June sales in Toronto and Vancouver reveals a tale of cautious buyers and eager sellers. Last month, Toronto recorded 6,213 sales, a 16 per cent decrease compared to June 2023. Average nominal housing prices were also slightly lower year-over-year. Meanwhile, active listings increased by 67.4 per cent from last year, indicating weaker demand and stronger supply.
Toronto’s housing market is often spatially divided into the City of Toronto (known by its area code 416) and its surrounding suburbs (known by the area code 905). In June, prices for detached homes and condominiums declined more in the 905 than in Toronto compared to June of last year. Sales of detached homes saw a sharper decline in the 905, while condo sales fell more significantly in
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