What Trends are we Seeing?
The number of home sales in September 2024 rose by 8.5 per cent relative to that of September 2023. The combination of softer home prices and decreasing interest rates have brought some wait-and-see buyers off the sidelines. The benchmark home price index dropped 4.58 per cent on a year-over-year basis to $1,068,700. The largest decline came from the townhome market with a 4.0 per cent decline ($904,200). The second largest decline came from the condo market with a 3.6 per cent drop ($682,543). Notable was the increase in inventory with a total of 18,089 new listings hitting the market in September 2024 (a 10.5 per cent increase year-over-year). The escalation of number of transactions was not enough to tip the scales on the Sales to New Listings Ration (SNLR) which posted a 28 percent figure firmly planted in buyers market territory.
Although we operate in a firm belief that “numbers don’t lie”, we also understand that they don’t necessarily tell the entire story. From an anecdotal perspective we have seen multiple offers ranging from three bids to 15 on various product types and locations spanning from mid-town Toronto, Mississauga, and Aurora. It appears that as some wait-and-see buyers have come off the sidelines, they are keying in on the most attractive and same product producing bidding wars again. Overall buyer anxiousness is starting to rise as those who currently qualify for mortgages are eager to beat the buzzer and complete their transaction prior to the masses entering the real estate market and creating a frenzy and thus diminishing their purchasing power.
What Lies Ahead?
To say that the Greater Toronto Area (GTA) housing situation is complex is an understatement. Some of the factors that policy setters, Bank of Canada, and consumers are factoring into their decision-making process are as follows:
Gross domestic product (GDP) posted a 0.2 per cent growth for July with August figures expected to be flatlined and Q3 figures estimated at 1.5 per cent missing the prior estimated 2.8 per cent from the Bank of Canada. Notable within these figures is that construction contracted for the second month in a row by 0.4 per cent.
With affordability consistently in the spotlight, it can feel like a supply and demand tug-of-war occurring with contradictory factors coming into play. Fundamentally, the market understands that there is a housing shortage upon us (despite the current buyer’s market), with 30,000 less housing starts this year compared to last year and the widest gap in housing to population requirements we have seen in 50 years.
It is expected that over the next two years we will see over 60,000 condo units come to market. Even though we need housing it appears that we may have built the wrong thing with many of those units satisfying investor needs (who have mostly left the market) and not end users looking for bigger spaces. To one extent we will be short on housing and in the same breath we have to acknowledge the excess supply of a housing product not in great demand.
The market ahead will be influenced by the proposed policy changes due to come into effect. Effective December 15th the insurable mortgage limit will be upped to $1.5M which will move the needle on the down payment needed from $300,000 to $125,000 (on a $1.5M purchase). First time home buyers will be able to amortize any purchase over 30 years and insure buyers of new construction for the same period. The combination of policy change on insurable mortgages, amortization periods, and factoring in that we are set to see close to $1 trillion transfer of wealth from baby boomers to their heirs in the next few years is like applying gasoline on a burning fire to the bread and butter of the real estate market (properties priced up to $1.5M). Demand is set to skyrocket and affordability may deteriorate further.
For buyers, with GDP flatlining, employment in a precarious situation and a definitive downward trend to interest rates, the call to action off the sidelines to capture the excess supply sitting in some segments of the market has never been louder. For sellers, it is time to start prepping, and determine if now is the ideal time to capture the early “entrant buyers” and if your product fits the build for a buyer frenzy; or, simply preparing yourself for what may be an overwhelming floodgate of suppressed buyers that will enter the market shortly as interest rates continue with downward adjustments and new policy changes giving them the added affordability to take their next life steps and build wealth through real estate purchases.
What is Happening with Sale Prices
Sale Price Comparison | ||||
Product Type | Changes from September 2023 to September 2024 | Changes from August 2024 to September 2024 | ||
Toronto | GTA | Toronto | GTA | |
Detached | -2.4% | -0.5% | -0.6% | -0.2% |
Semi-Detached | +1.3% | -2.0% | +7.9% | +0.4% |
Townhouse | -1.7% | -4.1% | +7.9% | -0.2% |
Condominium | -3.5% | -4.1% | +3.8% | -4.2% |
Number of Transactions Trend
When comparing September 2024 to September 2023, we saw the following trend:
Categories | September 2024 | September 2023 | Percentage Change |
Number of Transactions | 4,996 | 4,606 | +8.5% |
Number of New Listings | 18,089 | 16,377 | +10.5 |
Number of Active Listings | 25,612 | 18,906 | +35.5% |
When comparing September 2024 to August 2024, we saw the following trend:
Categories | September 2024 | August 2024 | Percentage Change |
Number of Transactions | 4,996 | 4,975 | +0.4 |
Number of New Listings | 18,089 | 12,547 | +44.2% |
Number of Active Listings | 25,612 | 22,653 | +13.1 |
Looking into the different geographic pockets of Toronto and the GTA we notice the following changes in number of transactions when comparing August 2024 year-over-year to August 2023 and month-over-month to July 2024. The breakdown per area and product type are as follows:
Number of Transactions Comparison | ||||
Product Type | Changes from September 2023 to September 2024 | Changes from August 2024 to September 2024 | ||
Toronto | GTA | Toronto | GTA | |
Detached | +10.1% | +10.7% | +23.8% | +1.2% |
Semi-Detached | +13.2% | +12.2% | +35.3% | -9.5% |
Townhouse | -8.7% | +21.4% | -6.5% | -3.0% |
Condominium | +2.2% | -2.0% | -6.3% | -9.5% |
Footnote: Source of statistical data is from the August 2024 and September 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