The once red-hot Greater Toronto Area (GTA) real estate market cooled off in August, with a 5.3% drop in sales from August 2023 and declines of both the benchmark and average home prices, according to a report from the Toronto Regional Real Estate Board (TRREB). The GTA saw 4,975 sales last month, down from 5,251 sales in August last year with sales edging up slightly in August from July, says the TRREB report, adding the 12,547 new listings last month were down slightly compared to July but up 1.5% year-over-year. The MLS Home Price Index Composite benchmark was down by 4.6% year-over-year in August and the average selling price was down by 0.8% compared to August 2023 to $1,074,425. “The different annual rates of change between the MLS HPI Composite and the average selling price were largely due to an increase in the share of detached home sales compared to last year, impacting the average price,” says TRREB. Going forward, Jennifer Pearce, TRREB president, sees some market dynamics changing. “The Bank of Canada’s rate cut announced on September 4 will lead to a further improvement in affordability, especially for those using variable rate mortgages,” says Pearce. “First-time buyers are especially sensitive to changes in borrowing costs. 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.” The increase of new listings, year-over-year, should keep any price increases moderate, says TRREB Chief Market Analyst Jason Mercer. “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,” says Mercer. “Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed. Ample choice in the market will help keep price growth moderate, at least in the initial phases of recovery.” TRREB CEO John DiMichele says, regardless of the current inventory situation, GTA municipalities need to do more to increase the supply of new homes. “Today’s elevated listing inventory will ultimately recede,” says DiMichele. “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.” “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. Housing is a key driver of our region's economic development.”
