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Toronto Real Estate Market Faces Significant Decline: New Home Prices and Condo Sales Hit Record Lows
The Toronto real estate market has been experiencing significant changes, with new home prices dropping by over 30% and condo sales plummeting by 91%. Despite falling prices, demand for new homes and condos remains weak, highlighting shifts in the city’s property market.
New Home Prices in Greater Toronto Plunge Over 30% from Peak
The price of new homes in Greater Toronto has taken a dramatic turn, reversing years of steady growth. As of October, the cost of a new single-family home dropped by 1.0%, falling by approximately $15,600 to $1.55 million. This marks a 4.9% decrease of $79,800 compared to last year. Overall, prices have fallen by more than 32% ($751,000) from the all-time high reached in 2022, bringing them back to the levels seen in 2021. This decline signifies a rollback of nearly three years of price increases.
Condo Apartment Prices See Steep Declines
While single-family home prices have been on a downward trajectory, the condo market is witnessing even more significant drops. In October, the price of a new condo apartment fell by 1.8%, equating to a loss of $18,900, bringing the benchmark price down to $1 million. Although this is only 1.6% lower than last year, it highlights the accelerating pace of price declines. Compared to the peak price, condo prices are now 32.5% lower, amounting to a $483,700 drop. This brings condo prices to their lowest level since 2020.
Sales Activity Dips Sharply, Especially in the Condo Market
The sharp price declines are a result of weakened demand in the new home market, particularly for condos. In October, just 765 new homes were sold across Greater Toronto, a staggering 60% decrease from the previous year. This figure is 77% below the 10-year average for October sales, pointing to a major shift in consumer behavior.
Single-Family Home Sales Continue to Struggle
Sales of new single-family homes have also been sluggish, with only 555 units sold in October. This marks a slight decrease from the previous year and is 45% lower than the 10-year average. The high price points of these homes make them unaffordable for many potential buyers, leading to lower-than-average sales numbers.
Condo Sales Plunge to Historic Lows
The condo market, once a significant player in Toronto’s real estate scene, is now facing its own challenges. Only 210 new condos were sold in October, a dramatic 84% drop compared to last year. This marks a 91% decrease from the 10-year average, a clear indication that demand for condos is at an all-time low. It’s worth noting that even during previous downturns, condo sales were generally higher than this.
Why the Market Is Struggling: A Deeper Look
Despite falling prices, new home sales in Greater Toronto have continued to struggle. The primary reason behind this stagnation is weak demand. For single-family homes, the high prices have kept many buyers on the sidelines, as homes are priced beyond the reach of most households.
The condo market’s troubles are more recent and can be attributed to a shift in investor sentiment. With prices in a downward spiral and rents decreasing, real estate investors are pulling back from the market. This shift has a particularly strong impact on the condo segment, which has been heavily dependent on investor purchases rather than owner-occupiers.
What’s Next for the Toronto Real Estate Market?
The future of the Toronto real estate market remains uncertain. While the downturn in new home prices could signal a cooling off period, it is still unclear how long this trend will last or if prices will stabilize. With condo prices continuing to fall and investor confidence wavering, it could take time for the market to find its footing again.
As we move into 2024, all eyes will be on how both the residential and condo markets respond to ongoing challenges, including interest rate fluctuations, government interventions, and broader economic conditions.
