Toronto Condo Sales are Tanking — But Asking Prices Aren’t Budging. Here’s Why

Toronto’s real estate market is experiencing a peculiar trend: condo sales are significantly down, but asking prices remain stubbornly high. This anomaly is perplexing both buyers and industry experts. In June, condo sales in Toronto plummeted by 29% year-over-year, yet prices saw a marginal decline of just 0.9%, according to the Toronto Regional Real Estate Board (TRREB).

Over-leveraged Sellers

One of the primary reasons for this trend is that many condo owners are over-leveraged. These sellers are reluctant to list their properties at prices lower than their purchase value, which would result in financial losses. As a result, they prefer to hold onto their units, hoping for a market rebound, rather than reducing their asking prices to stimulate sales.

High Inventory

Despite the decline in sales, the inventory of available condos has increased. New listings were up by more than 12% year-over-year, providing buyers with a broader selection. However, this surplus has not translated into significant price reductions because sellers are not willing to sell at a loss.

Economic and Market Factors

Several economic factors contribute to this scenario. High mortgage rates and the overall cost of living have dampened buyer enthusiasm. Although there is a record number of condos on the market, the prohibitive cost of borrowing and maintaining these properties discourages potential buyers.

Future Predictions

Market experts are divided on the future trajectory of condo prices. Some predict that if the central bank reduces lending rates, it could attract more buyers and potentially drive prices up. On the other hand, persistent high rates could prolong the current stagnation. Despite the slump in sales, some forecasts still anticipate a modest increase in prices by the end of the year due to pent-up demand and limited housing stock relative to the population growth.

Toronto’s condo market is in a state of flux, characterized by high inventory and low sales, but resilient prices. Over-leveraged sellers, economic conditions, and market predictions all play roles in this complex situation. Whether prices will eventually adjust or remain steady as sales pick up is a matter of economic conditions and policy decisions in the coming months.

For those interested in purchasing a condo in Toronto, this period presents a unique landscape: a buyer’s market in terms of selection, but not necessarily in terms of price. Potential buyers may need to wait for further market adjustments or hope for favorable changes in economic policies to make their move.