Toronto Condo Sales Plunged 15 Percent in August as Prices Decline: Real Estate Board

The construction of a new condo development is seen in Toronto on Feb. 23, 2023. The Canadian Press/Chris Young

Toronto condo sales saw a sharp decline in August, with prices falling by 6 percent. The drop occurred amid a recent Bank of Canada rate cut, which is expected to offer some relief to first-time homebuyers, according to a Sept. 5 market report from the Toronto Regional Real Estate Board (TRREB).

Condo sales in Toronto fell by 14.8 percent year-over-year, with average prices at $681,835, said the TRREB report. This marks a significant contrast to July, when sales saw a modest 1.3 percent decline year-over-year, and prices averaged $748,330.

The decline in sales and prices took place just before the Bank of Canada lowered its key interest rate for the third time in 2024, cutting the rate from 4.5 percent to 4.25 percent on Sept. 4. That move should improve affordability for those using variable-rate mortgages and boost confidence among first-time homebuyers, who are more sensitive to changes in borrowing costs, according to the board.

“As mortgage rates continue to trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market,” TRREB president Jennifer Pearce said in a news release.

Other segments of the market are also under pressure, reflected in sales of townhouses dropping 18.4 percent in August and prices plunging 6.6 percent to an average of $906,594.

Overall home sales declined by 5.3 percent year-over-year, with 4,975 homes sold last month compared to 5,251 in August 2023. The average selling price decreased by 0.8 percent from August 2023 to $1,074,425.

Homebuyers are showing hesitation, as listed homes stayed on the market for 28 days, 40 percent longer than at the same time last year.

While Toronto has historically faced supply shortages, homebuyers now have more options, said the board, helping to keep price growth moderate during the initial phases of the market recovery.

“As borrowing costs trend lower over the next year-and-a-half, home buyers will initially benefit from both lower monthly mortgage payments and lower home prices. Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed,” TRREB chief market analyst Jason Mercer said in the release.

However, the board’s executive warns that current inventory levels will eventually diminish, highlighting the need for increased home construction to meet ongoing demand.

“Today’s elevated listing inventory will ultimately recede. We need to maintain a sustained focus on boosting home construction, especially as it relates to producing the right mix of home types to meet consumers’ needs. This new housing also has to be affordable,” TRREB CEO John DiMichele said.

“Municipalities can help by reducing development charges, which are ultimately passed on to home buyers. If people can’t find affordable housing in the GTA or surrounding Greater Golden Horseshoe, they will move elsewhere, and not necessarily to other parts of Ontario or Canada.”