Rising rates hits hardest at detached and semi-detached house prices

Less expensive condos and townhomes held their value better in November than costlier detached and semi- detached houses in the Toronto region, as home sales declined across all categories with higher interest rates continuing to increase the monthly carrying costs of a home.

The average price of all types of homes — from condos to detached houses — dropped 7.2 per cent year- over-year to $1.08 million, the Toronto Regional Real Estate Board (TRREB) reported on Tuesday. But detached home prices dipped 11.3 per cent to an average $1.4 million and semi-detached houses fell 13.9 per cent to $1.04 million.

Condos, however, remained relatively stable, declining only 0.9 per cent annually to an average price of $708,636. Townhomes saw a slightly greater 6.4 per cent year-over-year drop to $900,314 on average.

“With interest rates going up there has to be a mitigating factor and that was price. It makes sense that you’d see more of an impact on price at the higher end of the market,” said the real estate board’s chief market analyst Jason Mercer.

He said that the Toronto housing market is, however, showing signs of stabilizing.

The short supply of new listings on the market has helped buoy prices, which have remained within an average of $1.08 million to $1.09 million since the summer. That represents quite a bit of stabilization in the market compared to what we saw between February and June.

GTA Average Sale Price
July $1,074,754
August $1,079,500
September $1,086,762
October $1,089,428
November $1,079,395

November’s 4,544 home sales saw a 49 per cent drop compared to the same month last year but only slightly below October’s 4,949. The 8,880 new listings were down 11.6 per cent annually. Active listings, however, rose 96 per cent year-over-year as it took more homes longer to sell.

The Bank of Canada (BOC) raised its overnight rate by half a percentage point – 50 basis points on Wednesday, to curb high levels of inflation and cool housing prices across the country. It will certainly affect the latter, experts contend. Another half a percentage point hike in mortgage costs will further sideline homebuyers and drive housing prices lower, just as it is meant to.