By Rob Pilon: June proved to be an inflection point in market momentum this year. This is the first month in 2023 that saw a decline in month over month average prices. That means May represented the peak in prices this year and therefore the best month to have sold in 2023. Granted, a price drop of only 1.2% from May to June is somewhat inconsequential, but a definite seasonal softening trend is in play. April enjoyed a month over month price increase of 4.0% from March. May's prices also increased from April's but to a lesser degree at 3.7%. Then an actual decline of 1.2% in prices from May to June. It must be said that in approximately 78% of cases prices fall slightly from May to June due to seasonal trends. It's the exception when prices increase in June like they did during the initial stages of the pandemic. Prices bottomed in April 2022 due to the provincial state of emergency declared on March 17th, 2020. But with rapidly declining mortgage rates, buyers who were unaffected by job loss, flooded the market pushing prices up over 7% from May to June in 2020. Clearly an anomoly.

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The top 3 cities that felt the deepest May to June price cuts were Vaughan -4.0%, Newmarket -4.0% and Toronto -3.7%. The top 3 cities with the greatest May to June price gains were Caledon +14.2% (partly due to a greater quantity of 2M+ properties that sold in June), Pickering +4.7% and Richmond Hill +3.6%.

 

Looking at the big picture, prices throughout the GTA increased 13.8% year to date, nevertheless prices are still down 11.4% from the peak in February 2022. Prepare for more price declines as summer progresses.

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Sales fell 17% from May to June. Again, the first month over month decline in sales in 2023. In about 82% of cases, sales drop from May to June, so no big surprise here. However the rate of decline (17%) is noteworthy. In the last 20 years, only 2017 saw a greater decline in sales over those two months. Sales plummeted 21.8% from May to June in 2017 as the market began to crash in April 2017.

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Sales as a percentage of new listings worsened across the board. The less sales as a percent of new listings hitting the market indicates diminished buyer demand. For example, in all TRREB areas combined, the equivalent of 59% of all new listings that came out in May got sold. However June saw only 47% of new listings get sold. Some of the cities with the greatest decline in month over month sales to new listings ratios were Oshawa (67% in May vs 45% in June), Milton (66% in May vs 48% in June), Brampton (57% in May vs 49% in June), and Ajax (67% in May vs 50% in June). The overall market is in decline. The average of all TRREB areas peaked in April with the equivalent of 66% of new listings getting sold. As mentioned, May dropped to 59% and April dropped further to 47%. 

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The percent of properties selling over the asking price also declined from May to June in every city in the GTA. In Vaughan, 53% of all properties sold over the asking price in May, but only 39% sold over the asking price in June. Whitby 76% in May vs 66% in June, Newmarket 65% in May vs 57% in June. The cities that held pretty steady from May to June were Markham 74% in May vs 72% in June, Richmond Hill 60% in May vs 58% in June, and Toronto 49% in May vs 47% in June.

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Finally, Months of Inventory (MOI) has increased from May to June in every city in the GTA. Here's a refresher on what MOI means: let's say there were 1,000 sales in January and 2,000 properties remained unsold at the end of January. How many months would it take to sell all 2,000 properties at the rate of 1,000 sales per month, assuming no new listings come on the market. Answer, 2 months. An increase in months of inventory means the stockpile of unsold properties is mounting, albeit not by leaps and bounds thankfully. In all TRREB areas, there were 1.3 months of inventory at the end of May. At the end of June, inventory increased to 1.9 months.

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We can reasonably assume that some of the above metrics will get worse in July.