Toronto Real Estate Prices Drop As Market Loosens At A Breakneck Speed

Greater Toronto real estate is unlikely to have a Christmas rally like some had hoped. Toronto Regional Real Estate Board (TRREB) data shows home prices fell further in November. Home sales continue to fall while inventory builds, easing market conditions. In fact, the erosion of market pressures is occurring at one of the fastest rates in history, applying more downward pressure on prices. 

Greater Toronto Real Estate Prices Fell $20k Last Month, Back to 2022 Levels

Greater Toronto real estate prices continue to fall, now wiping out any gains made over the past year. The TRREB benchmark price shed $22.3k to hit $1.08 million in November. The City of Toronto benchmark fell $19k to $1.06 million. Both measures are virtually unchanged from last year, with the brief period of gains made earlier this year now totally wiped out.  

Toronto Real Estate Has Fewer Sales & More Inventory

Weak sales are a result of weakening means, with investors no longer in a rush to scoop everything in sight. Sales fell 6% to 4.23k in November, one of the weakest ever recorded. At the same time, inventory jumped 16% higher to 10.55k new listings for sale. New sellers are appearing at more than double the pace of new buyers, and predictably that’s led to a loosening of conditions.

Greater Toronto Real Estate Is Seeing The Market Collapse At One of The Fastest Rates In Histity

The Greater Toronto real estate market is loosening at one of the fastest rates on record. The unadjusted sales to new listings ratio (SNLR) was just 40% in November, on the border of a buyer’s market. That’s the real estate industry’s friendly way of saying there’s an excess of supply for qualified buyers at this price, and lower prices are expected. 

But wasn’t demand off the charts a few months ago? National Bank of Canada (NBF) provided data showing this was one of the fastest market breakdowns in history.

“The low level of sales nevertheless allowed inventory to build up, as we estimate that active listings were up 8.1% in November, a sixth positive print in a row and are now at their highest level since February 2019,” explained Daren King, an economist at NBF. 

Adding, “As a result, market conditions in Toronto, defined by the active-listings-to-sales ratio, loosen and are now way looser than the historical average.” 

King’s chart shows the number of standard deviations the SNLR has shifted from the median over time. The rapid surge implies one of the fastest moves in at least a decade, revealing the collapse in exuberance. 

The demand surge fueled by investors with cheap leverage disappeared almost as fast as it arrived. All eyes are now watching to see what happens first— the gap between what investors paid and end users can afford closes, or cheap leverage returns. The latter may compound issues, but policymakers seem to favor it.