The Bank of Canada is cleaning out a lot of froth from the housing market: Senior economist
The tide continued to shift in favour of homebuyers in the Greater Toronto Area (GTA) last month amid higher borrowing rates.
Home sales in the GTA sank 38.8 per cent in May compared to a year earlier, as 7,283 properties changed hands, according to data released by the Toronto Regional Real Estate Board (TRREB) Friday. It also represented a nine per cent decline from April. It’s the second month in a row where sales were down on a monthly and annual basis.
All property types, ranging from detached homes to townhouses to condos, posted significant double-digit sales declines compared to May 2021.
The data showed active listings jumped 26 per cent year-over-year in May, while the number of newly-listed homes was essentially flat.
The shifting dynamics of the market come as the Bank of Canada aggressively raises its benchmark interest rate.
“There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer,” said Kevin Crigger, president of TRREB, in a release on Friday.
“However, as homebuyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration.”
The Bank of Canada hiked the target for its overnight rate by a half-percentage point on Wednesday to 1.5 per cent. On Thursday, Deputy Governor Paul Beaudry said the central bank’s key lending rate could rise above three per cent to tamp down inflation.
With buyers wielding more negotiating power, the average selling price of a home fell roughly three per cent to $1,212,806 on a non-seasonally adjusted basis. It’s the third straight month where the average selling price declined sequentially after hitting a record high of $1,334,544 in February.