Toronto Market Cools Ever So Slightly

The strong sellers’ market in Toronto continued for both houses and condos in May, though there are early signs of cooling.

For houses in the City of Toronto, there were 1,255 sales as compared with 1,322 in April, and the number of active listings increased from 1,398 to 1,479. The inventory of houses for sale thus increased from 1.1 to 1.2 months, still extremely low. The average selling price for houses went up slightly, from $1,699,756 to $1,716,272. Overall, then, the market for houses remained steady in May, with a small tilt toward higher inventory.

For perspective, sales of houses in May were higher than any month in 2020, and the average selling price remains within spitting distance of the all-time high of $1,750,518 reached two months ago. So we remain in a very strong sellers’ market, notwithstanding these early signs of cooling.

For condos, the story is similar, though with a somewhat stronger hint of cooling. The average selling price for condos in the City of Toronto was $716,976 in May, only slightly lower than the all-time high of $727,737 reached last month. As for houses, sales of condos were down (1,881 versus 2,277) and listings were up (2,754 versus 2,351), Inventory thus increased from 1.0 to 1.5 months, still very low and definitely still in sellers’ market territory.

What will happen to the Toronto market as we head into summer? Prior to COVID, we could count on a ‘summer slowdown’ beginning in late June and continuing until early September. Our summers are short, after all, and buyers and sellers alike would often take some time off from house-hunting and home-selling to enjoy the weather.

This year, the summer slowdown might be longer and stronger than we have seen in the past, for three reasons:

1. COVID restrictions are (hopefully) coming to an end soon, and folks are eager to get away to cottages, resorts, etc, after being cooped up for such a long time;
2. Children are still schooling remotely, so there is no need to wait until the end of the school year to head out from the city – the kids can do their remote schooling at the cottage if need be; and
3. Warm summer weather has arrived ahead of schedule, further fueling the desire to escape.

All of this will probably mean fewer sales and fewer listings over the next few months. The impact on prices is harder to predict, and will depend on whether buyers or sellers are, overall, more inclined to wait until fall.

For example, if listings fall steeply, while buyers, by and large, decide to continue searching, prices could remain steady or even increase. On the other hand, if large numbers of sellers decide that it’s safer to sell now rather than risk a market correction by the fall, prices could fall.

Whatever happens to prices over the summer, the fall will probably bring a renewed surge in sales, listings and prices, as both buyers and sellers return. Always assuming, of course, that mortgage interest rates remain close to their present levels. Once mortgage rates begin to rise, things will change.