TORONTO — Greater Toronto Area home prices fell almost 18 per cent from last February — the largest year-over-year drop on record — as the number of properties sold was halved, the region's real estate board said.
The Toronto Regional Real Estate Board (TRREB) said Friday that the average selling price for February totalled $1,095,617, roughly five per cent higher than the average January price of $1,038,390.
It attributed the swings to higher borrowing costs prompted by a quick succession of interest rate hikes, which have weighed on the market and offset the dramatic drop in prices that has materialized in recent months.
But Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd., cautioned against reading too much into the steep year-over-year price drop. She sees 2022 as an anomaly because COVID-19 contributed to a massive demand for homes that was unlikely to be sustained for years to come.
While conditions are not as frantic as they were in the pandemic, she sees housing activity picking up again.
"With a few of my clients over the last couple of months, we've been in bidding wars, and we kind of thought bidding wars were over, but this year has really proven...they are back with a vengeance," she said.
"I had a client a few days ago who lost out on a townhouse where there were 19 offers."
First-time homebuyers who shied away from purchases as mortgage rates rose are returning to the market along with people who simply need to move or have outgrown their homes.
"There are people that need to buy, they're not playing games and they're not really trying to time the market."
Yet, even as prices have come down from pandemic highs, some buyers have sat on the market's sidelines awaiting further decreases and more supply, which has been lacking as prospective sellers lament the pricing slump.
Morrison fears they will miss an opportune time to buy.
"I think some of them might have missed their moments already by sitting and waiting and waiting," she said.
However, she thinks there could be a further price decline in April or May, if more supply comes on the market.
February's pricing data signals average selling prices are levelling off after trending lower through the spring and summer of last year, TRREB said.
The trend has pushed some buyers to purchase a lower-priced home.
TRREB found the share of home purchases below $1 million sat at 57 per cent last month, up from 38 per cent during the same time period last year.
Overall sales remain far lower than they were a year ago, when the market was soaring, buyers dropped conditions and feisty bidding conditions were the norm.
February sales totalled 4,783, down 47 per cent from 9,028 a year earlier. In comparison, January recorded 3,094 sales.
A shift in sales could help prices level out, suggested Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets.
"With the Bank of Canada signalling a pause after aggressively tightening for the past year, we could see some price stability if sales pick up," she wrote in a Friday note to investors.
What happens to sales will largely depend on new listings, which also lag figures from a year ago, amounting to 8,367 in February. That number is down 41 per cent from a year earlier, but TRREB sees changes coming.
Ipsos polling the board has seen suggests buying intentions have picked up for 2023, said Jason Mercer, TRREB's chief market analyst.
"This increased demand will run up against a constrained supply of listings and lead to increased competition between buyers," he said in a news release.
"This will eventually lead to renewed price growth in many segments of the market, especially those catering to first-time buyers facing increased rental costs."
Mercer's remarks came a day after the Real Estate Board of Greater Vancouver said February's home sales were up 76.9 per cent from January, but down 47.2 per cent from the year before.
Sales for the month totalled 1,808, roughly 33 per cent below the 10-year February sales average.
The composite benchmark price for all residential properties in the B.C. region hit $1,123,400, a 9.3 per cent drop from the same month last year but a 1.1 per cent increase, when compared with January.
This report by The Canadian Press was first published March 3, 2023.
Tara Deschamps, The Canadian Press
