12 August: Toronto’s housing market continues to experience sluggish activity this summer due to strained affordability and high borrowing costs, according to a new RBC Economics report. The report highlights that while there was a modest increase in home resales in June, this was quickly reversed with a 0.7% decline in July. The market is particularly impacted by rapidly rising condo inventories, with active listings up by 64% compared to last year. Detached home listings also increased by 48% year-over-year.
Despite these inventory surges, home prices have remained mostly flat over the past four months, with the MLS Home Price Index benchmark at $1.09 million in July, reflecting a 5% decline from the previous year. The report attributes most of this decline to falling condo prices.
The RBC report also notes that while the Bank of Canada’s interest rate cuts earlier in the summer marked a potential turning point for struggling housing markets, their impact has been mixed. Some markets, including Vancouver, Calgary, and Toronto, saw a decline in resales in July, while Edmonton and Montreal experienced slight upticks in activity.
Looking forward, the report suggests that mounting condo inventories could continue to exert downward pressure on prices in the near term. However, it anticipates that recovering demand later in 2024 and into 2025 could help stabilize the market. The report also emphasizes that the balance between supply and demand varies significantly across different regions, with sellers having the upper hand in markets like Calgary and Edmonton, while buyers hold a slight advantage in the Toronto area.
