Home sales fall in the GTA: Will home prices follow?
Home sales and home prices continue to weaken in Canada’s largest real estate market, the GTA, as revealed by the latest numbers.
According to the Toronto Regional Real Estate Board (TRREB), home sales in April were down a sharp 41.2 percent year over year. In fact, home sales were down 27 percent from the previous month.
Home sales slowing down in the summertime is expected, but not during the usually red-hot spring real estate market.
On the home price front, home prices are still up, but not by as much in recent months. Home prices were only up 15 percent month-over-month in April. While still way above average, this is about half the home price increase we’ve seen in recent months.
When we dig into the numbers, we actually see home price declines. The price for houses and condos in the GTA is down from $1.3M to 1.25M, a decrease of 3.6 percent from March to April. This is the second month in a row home prices have decreased. Are we starting to see a trend?
What’s the cause of falling home sales?
Higher interest rates are mostly to blame for the fall in home sales. Higher mortgages rates means that if you’re applying for a fixed rate mortgage, you could see your home buying power drop by 7%, 8% or more.
High inflation is also a big concern for Canadians. Inflation is at a 30 year high in Canada. High inflation is causing homeowners to stop and think about how much they can afford to spend on a home. This means we are seeing fewer bidding wars and pre-emptive offers on homes.
Is it a good buying opportunity?
If you’ve been sitting on the sidelines, now could be a great buying opportunity to get into the market.
Bidding wars are a common reason for why homebuyers haven’t been able to get into the real estate market. If you find bidding wars frustrating, you’re not alone.
It looks like mortgage rates will continue to rise. Slowing homes sales and prices means that you may be able to buy a home for less and not have to deal with a bidding war to boot. You get the best of both worlds.
By getting into the market today, you can benefit from mortgage rates, before they rise further, and be able to buy your dream home.
It is possible home prices could decline further, but there’s no guarantee. You must weigh the option of buying now versus in the months to come.
Not sure how much you qualify for?
If you haven’t gotten a mortgage pre-approval or your old one expired, now would be the perfect time to get one. Contact us today for help with that.