Toronto real estate has been a tear for two decades now. House prices have increased exponentially in that time and seller’s have reaped the benefits of those prices while buyer’s have had to hustle to find housing they could afford and that they liked. However, since the recent interest rate hikes introduced in April 2021, the Toronto housing market has cooled dramatically.
Year-over-year sales down
Housing sales year-over-year were down a whopping 41.2% in April in the GTA and month-to-month they were down 27% – those are big percentages from a market that continued full-steam-ahead even during the pandemic. According to Douglas Porter of the Canadian Real Estate Association (CREA), this drop “suddenly getting into buyers’ market terrain.“
Good news for buyers
While supply is still tight, this drop in sales means that buyers will have more time to consider their options and won’t be faced with the kind of bidding wars that saw homes selling for thousands over their asking price.
What the drop in the market has meant is that greater numbers of buyers are now feeling remorse and looking for ways to get out of their purchase offer. Toronto real estate lawyers have seen an increase in the number of clients looking to either get out of a deal or to keep someone in a deal. With a drop in the market those who bought property on spec are worried that their investment will instead turn into a burden.
Porter added that “decades of history show that the sales-to-new-listings ratio is an excellent leading indicator for average transaction prices,” which essentially means that lower prices are around the corner. Although no one expects the free fall of what happened in the US in 2008, a correction is definitely possible.