What Trends are we Seeing?

The Toronto and Greater Toronto Area (GTA) saw a familiar trend for June 2024; decrease in number of transactions and relative stability in price.  The Toronto Regional Real Estate Board (TRREB) saw June 2024 sales decrease 16.4 per cent from last year.  The number of active listings in June 2024 was 67.4 per cent higher than that of the prior year and the number of new listings brought to the market was 12.3 per cent higher than the prior year.  The condo market saw the largest decline in number of sales across all TRREB with a 28.1 per cent decline in condo sales for June 2024 compared to June 2023.  Despite a significant drop in the number of transactions, the average selling price in the GTA was down 1.6 per cent year-over year for June 2024 to $1,162,167 from June 2023 at $1,181,002.

In last months edition we discussed a Sales to New Listing Ratio (SNLR) of 38 per cent which is technically defined as a buyer’s market; SNLR below 40 per cent is a buyer’s market.  Relative to June 2023 there has been an 11 per cent decrease in the SNLR from 46 per cent to 35 per cent and a deepening movement to a buyer’s market

What Lies Ahead?

The big question is how much of a rate drop is required to bring buyer’s back to the market?  An Ipsos polling for TRREB has indicated that when rate cuts cumulate at least 100 basis points that is when buyers will commence entering the market in greater numbers.  Let’s get a bit surgical with respect to the different factors impacting the Bank of Canada’s (B of C) interest rate decisions over the next few months and most pressing for July 24, 2024.

Reviewing the most recent inflation rate will be a top priority for B of C.  The consumer price index (CPI) moves to 2.9 per cent year-over-year backing expectations of 2.6 per cent and an upward movement from April 2.7 per cent figure.  There is another CPI report expected July 16th which will help guide B of C.  It is important to note that the common core inflation (metric that screens out certain components) slowed for the nineth month in a row and is at its lowest since April 2021 at 2.4 per cent.  Keep in mind that shelter represents 29 per cent of the CPI (including mortgage costs) and when it is removed from the picture inflation is running at 1.5 per cent.  Additionally, items that are impacting inflation which are not impacted by interest rates continue to rise, insurance costs and property taxes for example.

The rise in the unemployment rate to 6.4 per cent in June from a May figure of 6.2 per cent will support the calls for further interest rate decreases.

It is not just the increase in the unemployment rate that will be factored into interest rate decisions.  Wage growth continues to accelerate; however, it is being driven by public sector compensation.  Wage growth in the business sector for Q1 2024 was 3.4 per cent compared to non-business sector was 8.4 per cent.  Employment itself in the public sector has increased by 17 per cent since 2019 compared to a four per cent increase over the same time period for the private sector.  Therefore, the B of C may look through wage growth when assessing the state of employment and the impact of further interest rate reductions.

When examining the most recent Gross Domestic Product (GDP) figures, we saw an economy that grew 0.3 per cent in April.  Note that construction and the real estate activity decreased.  Residential building construction was down 2.3 per cent; largest decline since May 2023.

The underlying factor for the B of C to review when considering GDP is that six of the last seven months has seen a negative GDP per capita figure.

Looking forward from a seller perspective, we see that prices continue to be stable for those that benefit from making a sale now.  We have noted that strong product is attracting many buyers sooner rather than later and at attractive sale prices.  It is clear however, that there are many buyers sitting on the sidelines.  Canada has seen its population rise by 1.27 million in the last 12 months to end of June 2024.  Over the last three years we have welcomed 2.87 million people to the country as estimated by Statistics Canada.  Knowing that historically it has taken B of C just over three months to ease 100 basis points which is when one can expect those sidelined buyers to enter the market; for buyers now may be the perfect time to enter the market before facing elevated cost of entry with higher purchase prices and eventually lack of potential properties to choose from.

What is Happening with Sale Prices

Sale Price Comparison
Product Type Changes from June 2023 to June 2024 Changes from May 2024 to June 2024
Toronto GTA Toronto GTA
Detached -1.6% -4.2% -3.7% -0.3%
Semi-Detached -8.9% -7.4% -9.4% +0.7%
Townhouse -2.7% -5.6% -3.5% -1.0%
Condominium -0.9% -2.6% -0.5% -0.1%

 

Number of Transactions Trend

When comparing June 2024 to June 2023, we saw the following trend:

 

Categories June 2024 June 2023 Percentage Change
Number of Transactions 6,213 7,429 -16.4%
Number of New Listings 17,964 15,995 +12.3%
Number of Active Listings 23,613 14,108 +64.7%

 

When comparing June 2024 to May 2024, we saw the following trend:

 

Categories June 2024 May 2024 Percentage Change
Number of Transactions  6,213 7,013 -11.4%
Number of New Listings 17,964 18,612 -3.5%
Number of Active Listings 23,613 21,760 +8.5%

 

Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in number of transactions when comparing June 2024 year-over-year to June 2023 and month-over-month to May 2024. The breakdown per area and product type are as follows:

 

Number of Transactions Comparison
Product Type Changes from June 2023 to June 2024 Changes from May 2024 to June 2024
Toronto GTA Toronto GTA
Detached -7.2% -11.7% -12.6% -6.0%
Semi-Detached -20.8% -4.0% -13.9% +6.1%
Townhouse -13.4% -14.3% -9.0% -8.1%
Condominium -29.1% -25.9% -21.8% -21.6%

Footnote: Source of statistical data is from the May 2024 and April 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

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