Condominium sale prices within Toronto’s city limits and the broader region were hit by a housing market slowdown during the second quarter, says a new Royal LePage report.

The median condo price in Toronto proper fell 2.1% year-over-year to $711,500. The Greater Toronto Area median condo price fared moderately better, rising 1.4% to $741,500 from the second quarter of 2023.

Prices of condos and other housing types were hit by a double-whammy. New and active listing totals exploded and prospective buyers declined to enter the market despite a long-awaited Bank of Canada interest-rate cut.

“Sales activity in the GTA was unseasonably low this spring,” said Karen Yolevski, chief operating officer for Royal LePage. “Almost all of the price appreciation we’ve seen year-to-date occurred in the first quarter, followed by a virtual flatline.

“New listings are up double digits compared to this time last year, and active listings are the highest they’ve been in more than a decade..”

The aggregate price of a home in the GTA increased negligibly (0.9%) year-over-year to about $1.2 million in the second quarter of 2024. The median price of a GTA single-family detached home rose 1.3% to approximately $1.5 million from a year earlier.

Within Toronto’s city limits, the aggregate price of a home decreased marginally (0.5%) year-over-year, remaining in the $1.2-million range. The median price of a single-family detached home declined 0.9% year-over-year to $1.7 million.

Yolevski noted that sales activity has slowed across all segments and housing types, including pre-construction.

“Consumers’ ability to purchase a new construction property – whether investors or end-users – has been blunted by the fast and furious rise in interest rates over the last two years, as the value of pre-construction units are not increasing at the same pace as mortgage costs in the time between purchasing and closing,:” she said. “This drop in demand has, in turn, diminished builders’ confidence to launch new products in the near-term.

“The high cost of borrowing continues to be a major roadblock for builders in this city, and across the country.”

But Yolevski does not prices to be hurt for long. In other words, they will not keep falling.

She noted that, around this time in 2023, GTA sales activity and home prices ramped up after the BoC implemented the first rate hold following a series of rapid hikes designed to curb inflation.

“By comparison, prices recorded in the second quarter of this year are hovering around flat or showing modest decreases,” said Yolevski. “However, the trendline from the start of 2024 shows moderate, incremental gains. Despite a marked slowdown in activity, home prices are not trending downward, as most sellers have demonstrated they have the ability to hold out for the right buyer.”

She predicted that many buyers now sitting on the sidelines will eventually benefit from their decision to hold off on home purchases when they resume their buying efforts.

“The region has been starved for housing inventory for some time. Once consumers regain the confidence to re-enter the market – likely following several more interest-rate cuts – this boost in supply will be a welcome improvement to market conditions.”

Royal LePage is forecasting that aggregate price of a GTA home will jump 10% year-over-year in the fourth quarter of 2024, marking the biggest increase in all major Canadian markets.