The GTA is undergoing a real estate shakeup. Interest rates have risen, leading bidding wars to dissipate and prices to cool from the February peak.
That shift is being felt acutely in the suburbs – and the drop has not been uniform, with some areas seeing more dramatic falls than others.
The average selling price of a home in the GTA fell 6.4 per cent between March and April, and one per cent between February and March, after a year of consistent price hikes. That’s compared to a 0.5 per cent increase in Toronto’s downtown core.
But in places such as Milton, the decline has been more severe, seeing a more than seven per cent decline in average prices from $ 1.48 million to $ 1.37 from March to April, while Mississauga saw only a 0.56 per cent drop during that time.
“We’re now seeing the effects of demand shifting, as more people move back to the city due to the demand to return to the office,” said Christopher Alexander, president of Re / Max.
During the pandemic he said more people moved out of the city center pushing prices up drastically in the suburbs. “Because it was such an aggressive increase the prices are coming down at a greater rate compared to the city.”
Sales have dropped month over month, which does not typically occur in spring – prime real estate season. Fewer buyers and showings combined with owners under pressure to sell have driven down prices along with sales, said John Pasalis, president of real estate brokerage Realosophy.
The uneven price drop across the suburbs can be attributed to numerous factors, such as property types, demographics, and inflated prices in February and March.
For example, first-time home buyers are more impacted by rising interest rates and are less eager to jump on the market, impacting smaller property types such as condos and townhouses. And regions that saw more inflated home prices during the February peak are now experiencing greater declines.
Overall, Peel Region saw the average home price drop from $ 1.31 million in March to $ 1.29 million in April, or a decline of 1.5 per cent.
Brampton saw the biggest decrease, compared to Mississauga and Caledon, month over month at 2.9 per cent for the average home price between March and April. In that market, detached homes dropped by more than three per cent and attached homes (semi-detached or row houses) were down four per cent. By contrast, Mississauga’s month-over-month drop was 0.56 per cent.
One reason for the difference between the two regions is that in March the average sale price in Brampton was higher than Mississauga for the first time, said Jodi Gilmour, a real estate broker owner at Re / Max based in Mississauga.
Brampton’s year-over-year price increased a whopping 37 per cent while Mississauga closely trailed at 33.5 per cent. The more expensive the home price the more it needs to correct itself, she said.
In Caledon, home prices dropped just over one per cent month over month. Home prices there were skewed due to some larger sales, said Andrew Wildeboer, broker of record at Royal LePage.
“There were some big transactions, like a $ 10-million sale which likely impacts the home price composite,” he said.
Caledon also was not impacted by first-time home buyers in the same way as Brampton and Mississauga. The area is less desirable for first-time home buyers as price points are typically higher and the commute to Toronto is longer.
Now, as interest rates rise, it’s harder for first-time home buyers to enter the market and many aren’t jumping on real estate as readily, Wildeboer said.
The exurb saw home prices decrease by 2.7 per cent with a greater drop for detached homes at over three per cent.
Orangeville buyers are watching and waiting for the market to settle, said Wildeboer, who specializes in Orangeville real estate. Some sellers are willing to let their house go for less while some are holding on to see if prices go back up, he added.
“The further you’re pushed out of the city the more fluctuation in house prices can be seen as home prices have gone up aggressively over the last two years,” said Wildeboer. During its peak, the average home price in the town reached more than $ 1.1 million in March.
“The intense multiple offers we were receiving on pretty much every property type has gone down, especially for first-time home buyers in the area. They’re the ones waiting, ”he said.
Durham Region saw an overall price drop of 2.5 per cent with the average home falling from $ 1.15 million to $ 1.12 million from March to April.
Clarington saw the biggest drop at over four per cent, followed by Oshawa and Ajax at 2.8 per cent and Whitby at 2.3 per cent.
On the flip side, Brock and Uxbridge saw slight price gains both at 0.26 per cent over the same period. But the increase does not give the most accurate picture, said Realosophy’s Pasalis.
“Brock and Uxbridge have very few sales. There are also bigger home types there like farm-style properties that have higher prices which can skew the averages, ”he said.
In April, Brock had 82 sales, whereas Oshawa had 1,213.
“The regions with more sales give a more accurate depiction of what’s going on in terms of prices when looking at Durham,” Pasalis said.
Milton saw the biggest drop of more than seven per cent with the average home price hitting $ 1.37 million in April, falling from $ 1.48 million in March. Townhouse prices dropped the most at more than eight per cent.
At the end of February there were two to three listings for townhouses with up to 30 bids on one home, said Gilmour. By April there were dozens of listings as buyers came to a tipping point.
“Buyers realized these homes should not be over $ 1 million,” she said.
Combined with the Bank of Canada hiking the overnight rate, economic uncertainty with the war in Ukraine, and sellers waiting to put their homes on the market for the spring, the drop is not surprising, she added.
But even with the price fall, Gilmour said prices are up drastically year over year in Milton by more than 35 per cent. The price drop allows for market correction giving people a chance to breathe after the relentless upward pressure on prices during the pandemic.
“What we saw when houses reached the peak in February was a runaway fake market, home prices should not have been so high. We’re seeing a leveling out to a more agreeable number, ”she said.
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