Following the normal seasonal trend, prices and sales in June were lower than in May, beginning the slowdown that typically begins in mid June and continues until late August. Because of our short summer season, many buyers and sellers decide to take a break until after labour day, and the market therefore tends to ‘thin out’. Generally the balance shifts in favour of buyers, and so, along with fewer sales, prices sag and the inventory of homes for sale rises. There is also a psychological component to the summer slowdown: many buyers and sellers have come to believe (based on the historical pattern) that summer is not the best time to buy or sell, and this makes the natural downward tendency somewhat self-reinforcing.
Whatever the reasons, you can see the trend unfolding in the charts below. Prices for freehold (detached, semi-detached & attached) properties showed the biggest change in June, falling by more than 2% versus the previous month after increasing steadily over the past four months. After ‘catching up’ with last year in May, June prices are again below last year. If the last two years are any guide, we can expect freehold prices to continue falling over the next two months and then rebound in the fall, however, it’s unlikely that prices will return to present levels this year.
Condominium apartment prices are holding up much better than freehold prices, and remain close to the all-time high reached last month. Even condo prices are likely to fall during the summer months, however, and the autumn rebound may not get prices back to the lofty levels we have seen this spring.
Overall there were 8,860 sales of properties of all types in the GTA last month. This was down from 9,989 sales in May, but was a solid 10% higher than last June. At the same time, there were 19,655 properties listed for sale in June, down only slightly from the 20,017 listed for sale in May. Sales fell more than listings, and so the inventory of homes for sale crept higher, though still well within ‘sellers’ market’ territory.
The bottom line is that we have had a very strong spring market in the Toronto area and, though things are slowing down a bit for the summer, the market remains very healthy. With interest rates expected to remain flat or even fall slightly, this bodes well for continued strength through the rest of this year.