New home prices back to pandemic levels, new study shows

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Detached and semi-detached homes down 31 per cent, condos decline by 28 per cent

Average asking prices for a single detached and semi-detached home in the Greater Toronto and Hamilton Area (GTHA) has returned to levels not seen since the pandemic, findings contained in a new housing study reveal.

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The study, from data tracking firm Bullpen Research & Consulting Inc. indicates that in June of this year, the asking price for either was $1.7 million, a stunning 31 per cent decline from the market peak level of $2.47 million recorded in July 2022.

Condominium apartments, meanwhile, have declined 28 per cent from the market high of $1.58 million two years ago to $1.2 million, while new townhouses have declined “by 23 per cent from a 2022-high of $1.4 million to $1.08 million in June 2024,” the study noted.

Asked how he sees the market unfolding for the rest of this year and into 2025, Bullpen founder and CEO Ben Myers replied, “how much time do you have? It has been an interesting few years. Obviously, the pandemic resulted in emergency level low interest rates. Also, immigration had been high before that, and became high after the post pandemic period.

“And combine that with inflation caused by logistics issues and product inflation as well as the government taking a big piece of the pie with higher development charge, and it was a toxic mix of things occurring.”

Add in to that, he said, “investors getting excited about projects outside of the GTA, because people were going to move en masse because of working from home. Everyone was trying to predict the trends and pricing went up, which caused more people to buy units. We really got into a bit of a bubble, in new home prices in Q1 2021 to Q2 2022 period and we are seeing an unraveling of that bubble, essentially.”

There were, he added, also several  interest rate increases, which resulted in the cost of borrowing going way up, which  ultimately led to resale price stagnation and decline.

Investors, Myers, said were buying in the new condo market for capital appreciation, but there was no more capital appreciation: “And so they stopped buying. We have had developers stuck. Some of them have continued on to construction – they had enough sales, while others had come to market and realized that he could not get the sales and did not have a lot of room to lower pricing.”

There have been, he said, some new projects come online at pricing that was below 2022, but the developers would have had to have bought and at a time that allowed them to offer those types of prices.

Asked whether he expects prices to continue to decline Myers replied that “while I am not expecting any type of crash of any sorts,  we are going to see prices trend down and probably for the next year to 14 months.”

Factor everything in and Myers predicts  “an interesting couple of years ahead. I am trying to figure it out with my clients and seeing when this thing is going to bottom out and start to trend back up, but I think we still have a little bit a little bit of runway on the trend down for now.”