Toronto homes sales drops again in October amid falling prices

Toronto’s housing market slumped further in October, with sales and prices falling, as the high cost of mortgages deterred prospective buyers.

There were 4,867 transactions last month, a 5-per-cent drop from September after removing seasonal influences, according to the Toronto Regional Real Estate Board (TRREB). That was the fifth straight month of declines.

The Toronto region’s home price index, which removes the highest-priced transactions, was $1,125,300 last month. That was a 1.7-per-cent fall from September and the third straight month of decreases. However, the price was still higher than the $1,100,800 reached in October of last year.

The real estate association does not expect activity to rebound over the remainder of the year, with the Bank of Canada repeatedly saying that it is prepared to raise interest rates above the current 5 per cent if inflation remains high.

“Uncertainty surrounding borrowing costs will be the key factor keeping sales low,” said TRREB’s chief market analyst, Jason Mercer. Activity had picked up briefly in the spring when the central bank paused hiking interest rates. But the market has slowed since the bank raised interest rates in the summer and the BoC has given no indication that it is done.

 

 

The common five-year fixed mortgage rate neared 6 per cent last month, pushing borrowing costs up to their highest level since the fall of 2008. That was before the global financial crisis and years of low interest rates that has fuelled multiple real estate booms, including the pandemic’s buying frenzy.

Now, borrowers will face much higher mortgage rates when they are required to renew their loan. Many borrowers have not had to deal with the higher monthly payments because they either have a fixed-rate mortgage, where the interest rate remains the same for the term of the loan, or their lenders have allowed their amortization periods to be extended.

For most of the bank’s rate-hiking period, there has been a lack of homes available for sale. The real estate industry and economists have said this was a sign that homeowners have been able to handle higher mortgage payments.

But since the spring, more homeowners are putting their properties up for sale. There were 14,103 new listings in October on a seasonally adjusted basis. That was 3 per cent lower than September but 30 per cent higher than October, 2022.

 

This article was reported by The Globe and Mail