The Toronto Real Estate Board yesterday reported a meagre 888 sales in the first half of January, compared with 1,776 sales during the same period a year ago.

The average price of a home is also down, 9.5 per cent to $332,495, compared with last year's $367,574 – a $35,000 plunge.

"The economic situation in Canada has changed noticeably over the past year ... Toronto is not immune to this," TREB president Maureen O'Neill said.

"The GTA housing market has been impacted."

Realtors say a flurry of buying last January to escape Toronto's new land transfer tax that came into effect in February 2008 may have exaggerated the year-over-year drop.

Sales in the city of Toronto are off 54 per cent in the first 15 days of 2009, while prices are down more than $40,000 for the average home. Homes in the 905 suburbs were not hit as hard, with sales down 47 per cent and prices off $26,000.

There is no question this will be a difficult year for the housing market as well as the commercial real estate market.

Job losses for the GTA could mount to 125,000 over the next 12 to 18 months, according to a report by housing analyst Will Dunning.

"We are probably at the edge of a rapid drop in employment," Dunning said. "That added negative factor will accelerate, deepen and prolong the recession."

Dunning said he remains convinced the condo market is the most vulnerable to a downturn, with 36,700 units currently under construction in the GTA. In central Toronto, resale listings, as well as rental condo listings, are up 75 per cent from a year ago, he said.

"I've been saying for a long time that there is excess investment in the condo apartment market and the reckoning has been deferred due to delayed completions," Dunning said. "This has allowed the supply pipeline to get very fat. The reckoning has now begun."

Meanwhile, in the commercial market, there was just under 12 million square feet leased in 2008, compared with 13 million in 2007, resulting in an 8 per cent drop in activity according to a report on commercial and industrial activity released by TREB yesterday.

"This result demonstrates the commercial market has not escaped the downward economic pressures of the last several quarters," said TREB commercial council chair Garry Lander.

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Despite the fall, 2008 leasing figures are still up by 3 per cent over 2006 figures.

But analysts say it will be tougher for commercial real estate as layoffs start to sink in, while more than three million square feet of new space is set to be completed at the end of 2009.