Home Prices Drop in March as Supply Surges

Sales activity in the Greater Toronto Area noted its third-highest level of sales for the month and capped the second-best first quarter on record. A total of 10,955 homes traded hands, as reported by the Toronto Regional Real Estate Board which is a 30% decline from the record smashing 15,628 homes sold in March 2021, but a 20% uptick from February activity.

Additional housing supply came into the market which assisted in reducing the demand pressure and some of the tight competitive conditions experienced by homebuyers. 20,038 new listings were introduced in the market which is an increase of 41.6% from February, however it was till a 11.9% annual decline. Nevertheless, the new listings were strategic introductions to the market because the sales had reduced the pressure from GTA’s sales-to-new listings ratio, easing to 70.5% from last month’s 72.2%.

The overall inventory of homes sales rebounded from record lows because end-of-month active listings were noted at 10,167 which is 4.1% down from year-over-year but increased by 45.5% from last month. Moreover, home prices in the area also perceived a short-term dip at $1,299,894, with the average home costing 2.5% less than the February average. This is attributed to a larger proportion of cheaper condo units in the sales mix, as highlighted by TRREB.

It is imperative to note that the sellers are still dominating the housing market because the year-over-year prices have increased to 18.5% and the MLS Home Price Index also benchmarked the annual price increase at 34.8%. Although sales for all major home types were low and perceived year-over-year decline as well, condos were down by the smallest margin, down -17.6% with 3,154 units sold. Detached houses still continue to dominate the housing market in terms of sales volume at 4,884 transactions, however detached houses still perceived an annual drop in sales by -35.3%, followed by semi-detached houses (982 sales, down -33.4%) and townhouses (1,842 sales, down -29.9%).

Chief Market Analyst of TRREB, Jason Mercer said, “Competition between home buyers in the GTA remains very strong in most neighbourhoods and market segments. However, we did experience more balance in the first quarter of 2022 compared to last year. If this trend continues, it is possible that the pace of price growth could moderate as we move through the year,”. However, TRREB President Kevin Crigger added that the supply and demand imbalance is only set to worsen, as the region expands rapidly following the pandemic.