Over the last three months, the Toronto-area market has seen a dramatic shift. Demand-supply conditions shifted from near-record tight to nearly as loose as they were during the 2017 correction. Due to the area's steep prices and large mortgage sizes, buyers have been put on the defensive in the face of the Bank of Canada's rate hike campaign. Home resales have dropped by one-third in the last three months, with a 9.3 percent m/m drop in May. (on a seasonally-adjusted basis). After plummeting to historic lows during the pandemic, inventories are rebounding, rising 26% above year-ago levels in May.
Buyers’ sense of urgency has significantly diminished, and so has their willingness to enter into bidding wars. The MLS Home Price Index fell m/m in both April and May. Single-detached home values in the 905 belt—which had escalated the most in the past year—are seeing the stiffest headwinds. Condos in the City of Toronto, on the other hand, have been more resilient. We expect prices to remain on a downward trajectory as buyers gain pricing power.
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Milind Jog