What Trends are we Seeing?
2024 will likely be noted as a challenging one for both buyers and sellers for years to come.
From a buyer’s perspective the fundamentals of supply and demand played in their favour; seemingly. Even though interest rates dropped, affordability was still a challenge for many buyers struggling to meet downpayment requirements and seller resilience from a price perspective. The result was an average price drop on the Toronto Regional Real Estate Board (TRREB) of less than one per cent from 2023 to 2024; for an average price of $1,117,600 across all product type categories.
Seller’s saw glimpses of buyer activity in October and November where the number of transactions increased by more than 40 per cent both months year-over-year. However, December 2024 saw a much more muted level of activity with the number of transactions in December 2024 versus December 2023 being 1.8 per cent lower. Overall, on a year-over-year basis from 2023 to 2024 the number of transactions increased by 2.6 per cent. Many sellers have understood that the hyper-intensive seller markets of the past where five days on the market was the norm is no longer in place and that a +/- 30 days on the market was the new reality.
From a product segment perspective detached homes continue to be the favourite and demand lofty prices while the condominium sector struggled with excess supply, first-time buyers lacking downpayments to enter the market and seller’s choosing to rent and lose money over time in hopes of a revival to their assets equity in the long run.
When we examine the longer run of an economic cycle looking back over several years, we see a similar pattern emerging to that of the market correction of the early 1990s. When prices fell from their peak in 1989, there was the initial drop and then prices were essentially flat from 1991 to 1996. A similar trend can be seen emerging in alignment with the interest rate increasing in 2022 (see below).
What Lies Ahead?
The tangled web in front of us leaves us with an abundance of uncertainty. For years political stability has attracted investors to Canada, with a prorogued Parliament and upcoming election that will lead to at a minimum a new leader or as currently expected a new governing party it could pause investment across the board in all sectors of the economy. Our political climate at home comes as we approach a change in government in the U.S. where the ongoing threat of a 25 per cent tariff across the board results in many questions – will it be implemented and if so, what will the impact be? It should be noted that the Bank of Canada (BoC) will only be able to do so much to stave of uncertainty and any new tariffs imposed. Federal, Provincial and Municipal governments will need to engage and limit the impact of any tariffs applied.
On January 10th the Canadian unemployment numbers were released with a bit of a rosy headline. Unemployment dropped from 6.8 per cent to 6.7 per cent for December 2024.
Dissecting the numbers further we see that of the 91,000 jobs added to the economy 40,000 came from the public sector. In 2024 public sector job growth was at a rate of 3.7 per cent while the private sector growth rate was 1.4 per cent. This dovetails with the Gross Domestic Product (GDP) narrative where if we extract government spending form the figures it would be negative 0.3 per cent.
The BoC is in a position where it is likely to act at its next rate announcement on January 29th. Odds of a rate reduction are at 70 per cent. Expectations are that we will see a 25 basis-point reduction. The current BoC rate sits at 3.25 per cent which is the top end of its neutral range. Should tariffs be applied, we may see the BoC rate fall to below 2.0 per cent.
For buyers, act quickly and move forward if you qualify. As further certainty comes into the political and economic arena more buyers will come off the sidelines creating competition and an upward pressure on prices. Accounting for upcoming interest rate adjustments, it won’t be unreasonable to expect a +/- six per cent increase in average price in 2025 from 2024.
For sellers, resilience has been shown in all market segments across the TRREB. Continued resilience with in-depth analysis of your specific real estate objectives can make 2025 a great opportunity to transact. Connect with us to determine the right timing to optimize your rate of return from the real estate assets you hold.
What is Happening with Sale Prices
Sale Price Comparison | ||||
Product Type | Changes from December 2023 to December 2024 | Changes from November 2024 to December 2024 | ||
Toronto | GTA | Toronto | GTA | |
Detached | -0.3% | -1.0% | -4.2% | -2.4% |
Semi-Detached | +10.9% | +2.4% | +4.3% | -0.3% |
Townhouse | -18.2% | +4.7% | -0.4% | +2.7% |
Condominium | +1.7% | -1.4% | +0.9% | -3.2% |
Number of Transactions Trend
When comparing December 2024 to December 2023, we saw the following trend:
Categories | December 2024 | December 2023 | Percentage Change |
Number of Transactions | 3,359 | 3,419 | -1.8% |
Number of New Listings | 4,681 | 3,894 | +20.2% |
Number of Active Listings | 15,393 | 10,368 | +48.5% |
When comparing December 2024 to November 2024, we saw the following trend:
Categories | December 2024 | November 2024 | Percentage Change |
Number of Transactions | 3,359 | 5,875 | -42.8% |
Number of New Listings | 4,681 | 11,592 | -59.6% |
Number of Active Listings | 15,393 | 21,818 | -29.4% |
Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in number of transactions when comparing December 2024 year-over-year to December 2023 and month-over-month to November 2024. The breakdown per area and product type are as follows:
Number of Transactions Comparison | ||||
Product Type | Changes from December 2023 to December 2024 | Changes from November 2024 to December 2024 | ||
Toronto | GTA | Toronto | GTA | |
Detached | -16.3% | -2.4% | -54.6 | -94.3% |
Semi-Detached | -11.0% | -8.2% | -45.4% | -39.3% |
Townhouse | +21.4% | +2.4% | -34.3% | -35.5% |
Condominium | -4.7% | +17.2% | -46.2% | -31.0% |
Footnote: Source of statistical data is from the November 2024 and December 2024 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.
A – Monthly Percentage Change in the Number of Units Sold
B – Month Over Month Average Price Percentage Change
C – Seasonally Adjusted Month Over Month Average Price Percentage Change
D – Monthly Percentage Change in Average Sale Price