The red-hot real estate market in Toronto is showing signs of cooling down. As the Bank of Canada raises interest rates and signals that more hikes are on the way, housing prices in the Greater Toronto Area (GTA) are starting to drop.
Michael Carney, the director of business development at HouseSigma, a website that monitors property values and market trends, shared some significant findings. Data from February 1, 2022, to April 19, 2022, indicates a substantial decrease in home prices:
Detached Homes: Prices dropped by 12.1%, from $1.65 million to $1.45 million.
Semi-Detached Homes: Prices decreased by 13.5%, from $1.33 million to $1.15 million.
Freehold Townhouses: These saw the largest drop of 22.6%, from $1.24 million to $960,000.
Condominiums: Prices had the smallest decrease of 6.8%, from $740,000 to $690,000.
The frequency of bidding wars has lessened, and more homes are being delisted, signaling a market correction. Carney emphasized that while there's a noticeable drop, the fundamentals for the GTA housing market remain strong.
Jason Mercer, chief market analyst with the Toronto Regional Real Estate Board (TRREB), noted that the average selling price for the GTA saw a moderate reduction between February and March. He attributed this to the Bank of Canada's recent interest rate hikes, which have cooled the market. Mercer pointed out that historically, interest rate increases lead to a reduction in sales as buyers adjust their positions in the marketplace.
TRREB is set to release its own figures on housing prices soon, but it acknowledges that while prices are down month-to-month, they are still up by double digits compared to the previous year. Factors like immigration, high employment, and a lack of housing supply are expected to keep GTA housing prices strong in the long term.
Location plays a critical role in price changes. As more people return to offices in downtown Toronto, property values in the city's core are more likely to hold steady.
Adapted by Jose Gustavo
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