Greater Toronto house prices continue to fall in May 2022

We began to see the impact of rising inflation and interest rates in April, and May was a continuation of those trends. There were 7,283 house sales in the Greater Toronto Area in May 2022, which represents a 38.8% decline compared to May 2021. They were also lower than April 2022 by around 9%.

Meanwhile, the number of active listings rose by 26% last year thanks to new listings remaining at a similar level despite declining sales.

Given the strong price growth the market has enjoyed over the past year, house prices in the Greater Toronto Area remain significantly above May 2021 — the average selling price was $1,2,12.806, which is 9.4% up from last year. Similarly, the MLS Home Pirce Composite Benchmark increased by 23.9% over the same period. However, prices have fallen compared to last month as this time of high growth comes to an end.

So far, these changes have matched up with the 2022 forecast from the Toronto Regional Real Estate Board (TRREB), which predicted slowing growth rates and a decline in prices over the coming months. 

A significant factor in causing these trends was the Bank of Canada raising its interest rates at the start of June. Not only has this made it more expensive to take out a mortgage, but it’s also affected prospective buyers psychologically; many are now anticipating prices to fall further and willing to wait things out to get the best deal possible.

As a result, the power has shifted further toward buyers and given them the ability to negotiate, softening the market and bringing prices down. 

Yet this may not last forever — with immigration rising, unemployment low, and plenty of job vacancies, demand for housing is bound to get back on track eventually. Especially as buyers get used to the high borrowing costs and stop waiting for conditions to change. Analysts are largely expecting demand to remain low until the end of summer.

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