Home sales are falling in the Greater Toronto Area and an analyst with the city’s real estate board says prices are far from peak levels as the housing market adjusts to high interest rates.
Home sales in Greater Toronto fell six per cent last month on an annual basis, despite an increase in new listings, according to data released from the Toronto Regional Real Estate Board (TRREB) Tuesday.
Jason Mercer, chief market analyst at TRREB, told BNN Bloomberg that in terms of pricing, “we’re certainly well off the peak that we saw in the first quarter of 2022, before the Bank of Canada started its current rate tightening cycle.”
“It makes sense if you think about how the majority of Canadians purchase a home, they're using a mortgage and paying for it over the long term”, he said in a Tuesday interview.
“As a result, some people move to the sidelines, you (don’t) see as many sales relative to listings.”
Mercer explained that prospective buyers have more negotiating power as a result of fewer sales relative to listings. Because of that, prices adjust downward, he said, which works to soften part of the impact associated with higher borrowing costs.
The November real estate figures came a day before the Bank of Canada is set to announce its final interest rate decision of the year.
Economists tracked by Bloomberg are unanimously expecting the central bank to hold rates at five per cent – and some market watchers have begun calling for rate cuts to begin sometime in 2024.
Going into 2024, Mercer said his “real concern” is that potentially lower borrowing costs could prompt buyers to move from the sidelines into the market – which could further squeeze supply and push prices up.
“We’re not going to have adequate supply and we’re going to start to see an accelerated price growth,” he said.