Housing correction in Toronto could end up becoming 'one of the deepest of the past half a century,' RBC warns
A housing correction, which has already led to four consecutive months of price declines in the previously overheated Greater Toronto Area market, could end up becoming "one of the deepest of the past half a century," a new report from RBC warns.
New data released by the Toronto Regional Real Estate Board (TRREB) last week revealed that the average benchmark price for a home in the GTA fell six per cent month-over-month in July to $1,074,754.
Sales were also down a staggering 47 per cent from July, 2021.
In a report published on Aug. 4, RBC Senior Economist Robert Hogue said recent data from real estate boards underlines that higher interest rates are beginning to take a "huge toll" on the market.
Hogue said that with further hikes to come, prices will likely continue to slide in the coming months.
That prediction, it should be noted, goes against a report from Royal LePage last month which painted a rosier forecast for sellers in which values would more or less holding for the rest of the year following some declines in the second quarter.
“Our expectations for further hikes by the Bank of Canada—another 75 basis points to go in the overnight rate by the fall— will keep chilling the market in the months ahead,” Hogue said. “We expect the downturn to intensify and spread further as buyers take a wait-and-see approach while ascertaining the impact of higher lending rates. Canada’s least affordable markets Vancouver and Toronto, and their surrounding regions, are most at risk in light of their excessively stretched affordability and outsized price gains during the pandemic.”
The Bank of Canada has hiked the overnight lending rate by 225 basis points since March and has warned that further hikes will be necessary given that inflation remains at a near 40-year high.
- Download our app to get local alerts to your device
- Get the latest local updates right to your inbox
In his report, Hogue pointed out that the housing correction “now runs far and wide across Canada” but he said that it is particularly pronounced in the costlier markets of Toronto and Vancouver.
In fact, Hogue said that housing resale activity in Toronto is at its slowest pace in 13 years, outside of the early days of the COVID-19 pandemic.
The stockpile of available homes is also up 58 per cent from a year ago, he noted.
“With more options to choose from and higher interest rates shrinking their purchasing budgets, buyers are able to extract meaningful price concessions from sellers,” he said, pointing out that the average price of a home in the GTA is down 13 per cent from March. “We expect buyers to remain on the defensive in the months ahead as they deal with rising interest rates and poor affordability.”
While Hogue did say that condos in the City of Toronto are likely to remain “relatively more resilient” he said that prices elsewhere will continue to fall for the time being, especially in the 905 belt “where property values soared during the pandemic.”
The July data from TRREB suggested that the average price of a home in the GTA was still up one per cent from July, 2021.
CTVNews.ca Top Stories
Half of Canadians have negative opinion of latest Liberal budget: poll
A new poll suggests the Liberals have not won over voters with their latest budget, though there is broad support for their plan to build millions of homes.
opinion Why you should protect your investments by naming a trusted contact person
Appointing a trusted person to help with financial obligations can give you peace of mind. In his personal finance column for CTVNews.ca, Christopher Liew outlines the key benefits of naming a confidant to take over your financial responsibilities, if the need ever arises.
'One of the single most terrifying things ever': Canadian couple among tourists on sinking sailing boat tour abroad
A Toronto couple are speaking out about their “extremely dangerous” experience on board a sinking tour boat in the Dominican Republic last week.
'My stomach dropped': Winnipeg man speaks out after being criminally harassed following single online date
A Winnipeg man said a single date gone wrong led to years of criminal harassment, false arrests, stress and depression.
Ottawa injects another $36M into vaccine injury compensation fund
The federal government has added $36.4 million to a program designed to support people who have been seriously injured or killed by vaccines since the end of 2020.
Photographer alleges he was forced to watch Megan Thee Stallion have sex and was unfairly fired
A photographer who worked for Megan Thee Stallion said in a lawsuit filed Tuesday that he was forced to watch her have sex, was unfairly fired soon after and was abused as her employee.
An Ontario senior called Geek Squad for help with his printer. Instead, he got scammed out of $25,000
An Ontario senior’s attempt to get technical help online led him into a spoofing scam where he lost $25,000. Now, he’s sharing his story to warn others.
Accused of burglary at stepmother's home, U.S. senator says she wanted her father's ashes: charges
A Minnesota state senator and former broadcast meteorologist told police that she broke into her stepmother's home because her stepmother refused to give her items of sentimental value from her late father, including his ashes, according to burglary charges filed Tuesday.
Twins from Toronto were Canada's top two female finishers at this year's Boston Marathon
When identical twin sisters Kim and Michelle Krezonoski were invited to compete against some of the world’s most elite female runners at last week’s Boston Marathon, they were in disbelief.