High prices and rising interest rates are putting a strain on housing affordability
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The Greater Toronto Area housing market took another hit in June as more buyers took a wait-and-see approach amid rising mortgage rates. Home sales fell 41.4 per cent in the month compared to last year, the Toronto Regional Real Estate Board (TRREB) announced Wednesday, as 6,474 properties changed hands. Sales fell 11.1 percent month-over-month, or 4.7 percent on a seasonally adjusted basis. All property types in Greater Toronto experienced double-digit sales declines ranging from 30.8 per cent (for single-family homes in the City of Toronto) to 44.4 per cent (for townhouses in the outlying 905 area, which includes municipalities including Mississauga and Brampton). “Home sales have been affected by both the affordability challenge presented by rising mortgage rates and the psychological effect where homebuyers who can afford higher borrowing costs have put their decision on hold to see where home prices end up,” said Kevin Crigger, president of TRREB. , in a press release. “Expect current market conditions to remain in place through the slower summer months. Once house prices stabilize, some buyers will return to the market despite higher borrowing costs.” Borrowing costs are expected to rise further next week when the Bank of Canada announces its interest rate decision. Market data suggests, and economists widely expect, the central bank will follow in the Federal Reserve’s footsteps and raise the benchmark interest rate by three-quarters of a point to 2.25%. As more home buyers stayed on the sidelines in June, it appears sellers were playing the waiting game, too: The number of homes for sale recently rose just one percent in June, compared with a year earlier. Home prices continued to slide on a monthly basis, with the median sales price falling 5.5 percent to $1,146,254 — marking the fourth consecutive monthly decline.
