The magnificent house-price bubble in Toronto, which has raised eyebrows even across the jaded asset-bubble world, is hissing hot air.
Residential property sales in Greater Toronto plunged 20% in May year-over-year to 10,196 homes, according to the Toronto Real Estate Board (TREB), with sales of condos dropping 6.4% and sales of detached homes plunging 26.3%.
At the same time, new listings – the new supply suddenly coming out of the woodwork – soared nearly 50% year-over-year. The report tried to put a positive spin on it: “Homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains.”
And it has already impacted prices. The “TREB MLS Average Price” for all types of homes, dropped 6.2% from April to C$863,910. It remains up 14.9% year-over-year, given the crazy surge in prices over the past months, including the 33% year-over-year gain in March, when prices had gone totally nuts!
What pulled the rug out from under Toronto’s magnificent housing bubble? Three factors: