Housing prices fall in Toronto: RBC report

Canada is seeing “early signs” of an upturn in the housing market, and Toronto could see price declines this spring, according to the latest report from the Royal Bank of Canada.

In a report released last week, RBC said January was the second month in which residential transactions rose in major markets across the country.

“… this suggests that the recession that began in the spring of 2022 may have run its course,” said the report, authored by economist Robert Hogue.

“Since November, lower interest rates on fixed-rate mortgages have opened the door for buyers. Rising expectations that the Bank of Canada's next move will be a rate cut will bolster (low) confidence.”

Hogg further noted that a “strong” and “sustainable” recovery is not expected until the second half of 2024, before interest rates fall further.

Canada also has yet to see early signs of a “pick-up” in sellers due to higher credit costs, the report said.

“If anything, new listings have been on the weak side, working to strengthen supply and demand conditions. There is a risk that mortgage extension payment shocks could trigger a wave of distressed sales,” it said.

While prices have fallen in most of Canada's major markets, Calgary has bucked the trend, maintaining an “upward trajectory” for prices.

RBC predicts that prices will drop by one per cent across the country in 2024, with a 2.2 per cent drop in Alberta and two per cent in Ontario.

According to Hogue, the housing market may be turning around in the Toronto area.

“The recent drop in mortgage rates may have some buyers waiting to get a deal. Or the unusually mild weather put them in a springtime mood.”

The report notes that “extended conditions of affordability” could keep buyers out of the market until interest rates, property values ​​or both fall “more meaningfully”.

“For now, prices continue to decline,” the report said.

According to the Toronto Regional Real Estate Board (TRREB), the median sales price of a home across all property types in Toronto reached $1,334,062 in February 2022, before falling to $1,037,542 at the end of that year.

Prices have been largely stable since then, with the exception of activity last spring.

Toronto has seen six consecutive monthly price declines since July, with a total decline of $84,000, or 7.2 per cent, the report said.

“If the recent tightening in the supply-demand situation persists, this trend may not last long,” the report said. “We expect prices to bottom out this spring and gradually recover in the second half of 2024.”