The average price of a Toronto home dipped in March as a slight cooling of activity allowed the pace of new listings to close the gap with sales, even as the market remained heavily tipped in sellers’ favor compared with historic standards.
The average home price in Canada’s largest city dipped 2.6% to just under C$1.3 million in March from the month before, data released Tuesday by the Toronto Regional Real Estate Board show. The number of sales fell 30% from last year as new listings declined 12% in the same period, affording buyers slightly more choice than they enjoyed when Toronto posted its most-active March market on record in 2021, according to the report.
“We did experience more balance in the first quarter of 2022 compared to last year,” Jason Mercer, the Toronto real estate board’s chief market analyst, said in a statement. “If this trend continues, it is possible that the pace of price growth could moderate as we move through the year.”
The historic run-up in house prices Canada has seen the last two years is facing a crucial test heading into the traditional spring selling season as rising interest rates, and other efforts by policy makers to cool demand, provide more hurdles for buyers already stretched by record prices. The province of Ontario, home to Toronto, raised its tax on foreign home buyers last month, the municipal government plans to tax empty homes, and Prime Minister Justin Trudeau has indicated the federal budget coming Thursday will make housing affordability a focus.
All this comes with the Bank of Canada widely expected to begin one of the most aggressive efforts to raise interest rates in its history as inflation running at levels not seen in decades risks getting out of control. All six of Canada’s major private banks now expect the central bank to double the benchmark interest rate at a policy meeting next week, with more increases to follow later in the year.
But Toronto’s housing market remains historically tight. Last month was still the third-most-active March on record and the benchmark home price — calculated separately from the average to account for changes in the composition of home sales — rose 35% from last year. And the average length of time it took for a property to sell in Toronto fell in March to 11 days from 13 in the same month last year. This has led many in the real estate industry to diagnose the problem as a dearth of supply rather than excess demand.
“We need adequate housing supply and choice,” Kevin Crigger, the Toronto real estate board’s president, said in the statement. “This needs to be the focus of policy makers rather than short-term and ineffective measures to artificially suppress demand.”