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Summer Comes To The Toronto Market

Market Update

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06/18/23

Prices for both freehold and condo properties are falling in June, marking the beginning of a typical summer slowdown.

There are three reasons for the slower summer market:

  1. Our summer season is pretty short, and many buyers and sellers like to take a break to enjoy the weather and some vacation time;
  2. “Everyone knows” that summer is not a good time to sell your house – so many sellers prefer to wait until the fall; and
  3. Among those who are both buying and selling, most prefer to buy first. They’d rather not buy in late spring or summer so they can avoid listing their home at an inopportune time.

It is true that the summer market is ‘thinner’ than the spring or fall, meaning both fewer buyers and fewer sellers. However, it can still be a great time to buy or sell, as both buyers and sellers face less competition.

 

Freehold Homes (detached, semi-detached and attached)

So far in June, house prices in Toronto are about 5% lower than in May, and about the same as they were in April. The decline precisely matches the May/June fall in prices last year, however, it’s unlikely that we’ll see another summer ‘waterfall’ decline. Last year the rapid increase in interest rates caused the correction. This year, interest rates have been relatively steady, the most recent small hike notwithstanding. Prices could certainly fall a bit further, as they usually do in the summer. Once we get to early September, though, I expect that prices will reverse higher into a normal fall market (if indeed anything can be said to be ‘normal’ post Covid)

The inventory of freehold houses in Toronto increased sharply in May. This was a harbinger of the moderation in prices to come in June. From less than 1.5 months’ supply (extreme sellers’ market), inventory increased to over 2.5 months’ supply. This is still in sellers’ market territory, though close to being balanced.

 

Condominium Apartments

Condo prices in Toronto are also falling in June, although to a lesser extent than houses. As for houses, the decline matches the one in May/June last year. Once again, a steep summer decline as in 2022 seems unlikely and a fall recovery probable.

The inventory of condos for sale rose in May, foreshadowing the June moderation in prices as it did for houses. At 3.5 months’ supply, this indicates a roughly balanced market, favouring neither buyers nor sellers.

 

Bottom Line

For the first time since the beginning of Covid, the Toronto market is (so far) following a more or less ‘normal’ seasonal pattern. Assuming this continues, we can expect to see a bit more moderation in prices over the summer followed by a recovery in the fall starting after Labour Day.

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