Toronto Real Estate: Market Insights for September 2024
NewUser Success
Thursday, September 19, 2024
The Greater Toronto Area (GTA) real estate market is always evolving, and staying informed is essential for buyers, sellers, and investors alike. As of August 2024, market dynamics reflect the lingering effects of high borrowing costs, moderated price growth, and changing demand patterns.
This trend signals a shift towards a more balanced market. Increased inventory, coupled with softening demand, provides prospective buyers with more options and slightly better negotiation power than in the highly competitive markets of previous years. However, this balance might be short-lived, as mortgage rates are expected to drop over the coming year.
The average selling price in August 2024 was $1,074,425, a modest decrease of 0.8% compared to August 2023. This slight reduction in prices can be attributed to the overall slowdown in demand and a higher number of detached home sales. Detached homes typically come at a higher price point, and their increased share in total sales skewed the average price slightly higher.
On the other hand, the MLS® Home Price Index Composite benchmark, which adjusts for various factors to provide a more consistent picture of price movements, fell by 4.6% year-over-year. This metric gives a clearer indication of the ongoing price moderation across the GTA.
**The Bank of Canada’s Role in Future Affordability**
One of the most significant events this September was the Bank of Canada’s decision to cut interest rates. This move is expected to bring relief to homebuyers, particularly those relying on variable-rate mortgages. With borrowing costs set to decrease, we anticipate increased activity, especially among first-time buyers. These buyers, who are highly sensitive to interest rate changes, may find the upcoming months more favorable for entering the market.
As the Bank of Canada continues its easing of monetary policy, the real estate landscape will likely shift again. Home prices may experience downward pressure due to current inventory levels, but as mortgage rates drop further, demand is expected to bounce back in 2025. For those waiting for the right time to enter the market, this could be a window of opportunity.
**Condo Market: Is Recovery on the Horizon?**
The condo segment has been particularly impacted by the economic uncertainties and rising mortgage costs over the past year. However, with borrowing costs decreasing, this segment is poised for a recovery. The affordability factor makes condos an attractive option for first-time buyers and investors alike, who may have been priced out of the market in previous years.
As mortgage rates drop, we expect to see an uptick in demand for condos, particularly in downtown Toronto and other high-demand areas where inventory remains high. If you’re considering investing in the condo market, now could be the time to watch for emerging opportunities.
**New Listings: A Temporary Surge?**
While new listings increased by 1.5% year-over-year in August, they were down slightly compared to July 2024. This could indicate a temporary surge in listings as some homeowners sought to capitalize on the high-demand market earlier in the year. However, as interest rates fall and demand begins to rise, inventory levels could quickly decline.
According to TRREB’s chief market analyst, Jason Mercer, “Today’s elevated listing inventory will ultimately recede,” as demand picks up. This emphasizes the importance of paying attention to current market conditions, especially for buyers looking to capitalize on a period of higher inventory before competition increases.
Future Outlook: A Balance of Supply and Demand
Looking ahead, Toronto’s housing market is expected to remain well-supplied for the near future. However, as demand grows, particularly in 2025, the available inventory could be absorbed quickly. This may result in moderate price growth as the market adjusts to a new equilibrium.
TRREB CEO John DiMichele emphasizes that Toronto’s housing market needs to focus on producing the right mix of home types to meet consumer needs. This will be especially important as more buyers return to the market. Municipalities can also play a crucial role by reducing development charges, which could make new homes more affordable and encourage greater housing development.
For those looking to buy, sell, or invest in the Toronto real estate market, understanding the current trends and future outlook is key to making informed decisions.
August 2024 Overview: Cooling Demand, Rising Supply
In August 2024, GTA REALTORS® reported a 5.3% decrease in home sales compared to the same month in 2023. A total of 4,975 homes were sold, a notable drop from last year’s 5,251 sales. However, the number of new listings saw a slight year-over-year increase of 1.5%, with 12,547 properties added to the market.This trend signals a shift towards a more balanced market. Increased inventory, coupled with softening demand, provides prospective buyers with more options and slightly better negotiation power than in the highly competitive markets of previous years. However, this balance might be short-lived, as mortgage rates are expected to drop over the coming year.
Price Adjustments: A Reflection of Market Conditions
The average selling price in August 2024 was $1,074,425, a modest decrease of 0.8% compared to August 2023. This slight reduction in prices can be attributed to the overall slowdown in demand and a higher number of detached home sales. Detached homes typically come at a higher price point, and their increased share in total sales skewed the average price slightly higher.
On the other hand, the MLS® Home Price Index Composite benchmark, which adjusts for various factors to provide a more consistent picture of price movements, fell by 4.6% year-over-year. This metric gives a clearer indication of the ongoing price moderation across the GTA.
**The Bank of Canada’s Role in Future Affordability**
One of the most significant events this September was the Bank of Canada’s decision to cut interest rates. This move is expected to bring relief to homebuyers, particularly those relying on variable-rate mortgages. With borrowing costs set to decrease, we anticipate increased activity, especially among first-time buyers. These buyers, who are highly sensitive to interest rate changes, may find the upcoming months more favorable for entering the market.
As the Bank of Canada continues its easing of monetary policy, the real estate landscape will likely shift again. Home prices may experience downward pressure due to current inventory levels, but as mortgage rates drop further, demand is expected to bounce back in 2025. For those waiting for the right time to enter the market, this could be a window of opportunity.
**Condo Market: Is Recovery on the Horizon?**
The condo segment has been particularly impacted by the economic uncertainties and rising mortgage costs over the past year. However, with borrowing costs decreasing, this segment is poised for a recovery. The affordability factor makes condos an attractive option for first-time buyers and investors alike, who may have been priced out of the market in previous years.
As mortgage rates drop, we expect to see an uptick in demand for condos, particularly in downtown Toronto and other high-demand areas where inventory remains high. If you’re considering investing in the condo market, now could be the time to watch for emerging opportunities.
**New Listings: A Temporary Surge?**
While new listings increased by 1.5% year-over-year in August, they were down slightly compared to July 2024. This could indicate a temporary surge in listings as some homeowners sought to capitalize on the high-demand market earlier in the year. However, as interest rates fall and demand begins to rise, inventory levels could quickly decline.
According to TRREB’s chief market analyst, Jason Mercer, “Today’s elevated listing inventory will ultimately recede,” as demand picks up. This emphasizes the importance of paying attention to current market conditions, especially for buyers looking to capitalize on a period of higher inventory before competition increases.
Future Outlook: A Balance of Supply and Demand
Looking ahead, Toronto’s housing market is expected to remain well-supplied for the near future. However, as demand grows, particularly in 2025, the available inventory could be absorbed quickly. This may result in moderate price growth as the market adjusts to a new equilibrium.
TRREB CEO John DiMichele emphasizes that Toronto’s housing market needs to focus on producing the right mix of home types to meet consumer needs. This will be especially important as more buyers return to the market. Municipalities can also play a crucial role by reducing development charges, which could make new homes more affordable and encourage greater housing development.
For those looking to buy, sell, or invest in the Toronto real estate market, understanding the current trends and future outlook is key to making informed decisions.
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