What Trends are we Seeing?

Despite a decreased number of transactions, buyers illustrated a willingness to pay more for what they want.  Average price on the Toronto Regional Real Estate Board (TRREB) increased by 1.3 per cent from March 2023 to March 2024 ($1,121,615).  This was even though new listings had increased by 15.1 per cent.  Overall, the market remained balanced between buyer and seller with a 50 per cent Sales to New Listing Ratio (SNLR); SNLR greater than 60 per cent is a seller’s market and less than 40 per cent is a buyer market.

Stepping back and looking at the first quarter of 2024 there were 11.2 per cent more transactions with an additional 18.3 per cent more new listings.

Price increases are expected to continue, as predicted by the Canadian Mortgage and Housing Corporation, as the expected reduction to interest rates take hold in the back half of this year fueled by the 2023 strongest population growth Canada has ever seen (since the 1950s) creating additional demand. Below is an illustration of projected average price scenarios for 2024 through to 2026.

From a luxury home perspective, we have seen a migration away from larger more traditional cities like Toronto and Vancouver as luxury buyers choose to get more impact for their dollar in non-traditional luxury communities in other parts of the Country.  This does not mean that the Greater Toronto Area luxury market has been dormant, in fact, we have seen a 14 per cent increase in transactions versus the same time last year.  This however lags compared to areas such as Calgary, Montreal and Saskatoon that have seen over 50 per cent increase to their number of luxury transactions.  Ontario saw 60,000 people migrate last year able to take their Ontario real estate wealth and convert it into luxury living elsewhere in Canada.

What Lies Ahead?

Long anticipated interest rates draw nearer.  Traditionally unemployment rates just below 6.0 per cent are ideal for a strong economy.  As we retract from quantitative easing it may be that the Bank of Canada will feel comfortable to lower interest rates when unemployment falls between 6.0 per cent and 6.5 per cent; most recent figures indicated 6.1 per cent unemployment.  This is the highest unemployment rate that Canada has seen in two years setting the stage for the Bank of Canada’s patience with respect to interest drops to dissipate.  Outside of COVID19, 6.1 per cent unemployment is the highest unemployment since 2017.

The country shed 2,200 jobs in March.  This accompanied by the slower pace of hiring relative to population growth over the last few months provides comfort to the Bank of Canada that an interest rate reduction won’t stoke the flames of inflation; timing of said adjustment is the question.

This week Bank of Canada will announce its interest rate decision on what to do with its two-decade high 5 per cent policy rate.  It is highly anticipated that interest rates will remain the same with only a 20 per cent probability of a cut this week factored into most financial market odds.  With the past two inflation reports having a Consumer Price Index of slightly under 3 per cent for January and February we are approaching the Bank of Canada target of 2 per cent.  Interestingly, the largest driver of inflation at this time is mortgage interest costs.  It is a tangled web as the tool to combat inflation also exacerbates the mismatch between housing affordability, supply and population growth creating demand.  Financial markets have odds at 60 per cent that the Bank of Canada will make an interest rate adjustment in June 2024.

What this means for seller’s is that their resilience to bend to buyer demands for lower prices may soon pay off as prices begin to crescendo to a 2026 high.

For buyers, the opportunity buys have potentially passed as new buyers entering the market with lower interest rates opening the gates and increasing purchasing power.  The fundamental question of will it be more expensive to purchase today versus tomorrow will be yielding the unrelenting answer it has for so many years prior…

What is Happening with Sale Prices

Number of Transactions Trend

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

When comparing March 2024 to February 2024, we saw the following trend:

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

Footnote: Source of statistical data is from the March 2024 and February 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