The Toronto housing market has been a topic of much discussion and analysis over the past few years. After experiencing a period of rapid price growth and high demand, the market has seen significant changes in response to economic and policy factors. There are many questions about what the future holds for the Toronto housing market.
Will prices continue to decline? Will demand rebound or remain subdued? In this article, we will examine the latest trends and data from the Greater Toronto Area (GTA) housing market, as well as forecast what we can expect to see in the coming months.
Toronto Housing Market Trends in 2024
How is the Housing Market Doing Currently?
In January 2024, the average home sold price in the GTA stood at $1,026,703, reflecting a 1.2% year-over-year decrease. While this might raise eyebrows, a closer look at the data reveals a nuanced scenario.
The benchmark home price for January 2024, often considered a true reflection of the market, was $1,065,800, experiencing a marginal 0.4% year-over-year decrease. It's essential to note that the GTA hasn't seen a negative annual change in home prices since May 2023. However, the recent dip in Toronto's average home price can be attributed, in part, to the changing composition of home sales.
This shift is evident in the fact that detached homes comprised 41% of all home sales in January 2024, down from 44% the previous month. Conversely, condos made up 32% of all home sales, a 5% increase from the previous month. The increase in condo sales, often priced lower than detached homes, contributed to the overall decline in Toronto's average home price.
How Competitive is the Toronto Housing Market?
The start of 2024 marked a significant shift in the dynamics of the housing market. Despite a notable decrease in average prices, the number of home sales experienced a substantial uptick. GTA home sales saw a 23% increase compared to the previous month and a substantial 36% year-over-year surge, totaling 4,223 homes sold in January 2024.
The sales-to-new-listings ratio (SNLR) for this month was 51%, indicating that the Toronto housing market is currently in a balanced state. In a balanced market, the demand for housing aligns relatively well with the supply of available homes for sale, giving neither buyers nor sellers a significant advantage.
New listings increased by 8%, reaching 8,312 in January 2024 compared to 7,688 in the same month last year. This uptick in new listings, coupled with the balanced SNLR, suggests a market where both buyers and sellers can actively participate without facing undue pressure.
Are There Enough Homes for Sale in Toronto to Meet Buyer Demand?
Despite the surge in home sales, the average property days on market (PDOM) increased from 41 days in January 2023 to 54 days in January 2024. This shift indicates a market that is cooling, affording buyers more time to make informed decisions as inventory builds.
The GTA had 2.4 months of inventory, with Peel region standing at 2.1 months, and the City of Toronto exhibiting 3.1 months of inventory. Surprisingly, the City of Toronto's inventory surpasses even Simcoe County, which traditionally had the highest months of inventory in recent times, now standing at 3.0 months.
What is the Future Market Outlook for Toronto?
Looking ahead, the cost of borrowing remains a significant factor influencing buyer behavior. Many potential buyers are adopting a cautious approach, waiting on the sidelines as they evaluate their financial situation and mortgage affordability. There's optimism on the horizon, though, with multiple interest rate cuts forecasted in 2024, possibly bringing relief to mortgage borrowers, albeit in the latter half of the year.
Moreover, the average sales price to listing price ratio was 98% in January, indicating that, on average, homes sold for less than their asking prices. This could be an encouraging sign for future buyers, suggesting potential negotiation room in the market.
Regional Comparison: Contrasting Trends Across the GTA
City of Toronto
The City of Toronto witnessed a substantial 10% decrease in its average home price, falling to $959,915 compared to the previous month. This reflects a 3% year-over-year decrease. The benchmark home price in the City of Toronto is $1,050,300, down 1% year-over-year.
Regional Variances
Contrastingly, Oshawa's housing market experienced an 8% increase in prices year-over-year, reaching $789,252. Brampton's average home price remained nearly unchanged compared to the previous month, standing at $982,514. In Mississauga, the average price soared to $1,048,658, marking a substantial 14% year-over-year increase and a 10% increase from the previous month. However, Mississauga's benchmark price of $1,002,000 remained unchanged year-over-year.
Further afield, York Region, encompassing cities like Aurora, Markham, Vaughan, and Richmond Hill, reported an average selling price of $1,210,705, down 6% year-over-year. Durham Region, including areas like Ajax, Whitby, Oshawa, and Clarington, recorded an average price of $894,825, reflecting a 1% year-over-year increase.
These regional variations highlight the diverse and ever-changing nature of the Greater Toronto Area's housing market, where different cities experience distinct trends and fluctuations.
Property Types: Diverse Trends in Housing Categories
Delving into specific property types, the average price of a detached home in the GTA reached $1,350,828 in January 2024, marking a 1% year-over-year increase. Semi-detached homes also experienced a 2% year-over-year price increase, reaching an average of $1,038,303. Freehold townhouses, on the other hand, saw prices decrease by 1% year-over-year, settling at $963,504. Condo prices mirrored this decline, down 1% year-over-year to an average of $681,979.
Looking Forward: A Glimpse into Future Possibilities
Toronto home buyers may find relief on the horizon, with interest rates anticipated to decrease as early as June 2024. The current average sales price to listing price ratio of 98% suggests potential negotiation opportunities for buyers. However, as the market continues to evolve, staying informed and adaptable remains key for those navigating the complex and ever-changing real estate landscape in the Greater Toronto
Toronto Housing Market Forecast 2024
Greater Toronto Area (GTA) witnessed a surge in home sales and new listings in February 2024, demonstrating positive momentum in the housing market. On an annual and monthly basis, both home sales and new listings showed an upward trend. The selling prices also experienced a modest increase compared to the previous year, underlining the resilience of the regional economy and sustained population growth.
The Numbers Speak: According to data from TRREB’s MLS® System, there were 5,607 GTA home sales in February 2024, marking a substantial 17.9% increase compared to the same month in 2023. Even after accounting for the leap year effect, sales saw a noteworthy 12.3% year-over-year growth. New listings, indicating increased choices for buyers, outpaced sales in terms of annual rate, signaling a dynamic market.
Factors Driving Market Trends
Economic Resilience and Population Growth: The robust demand for housing is attributed to the resilient regional economy and continued population growth. Despite higher borrowing costs, the market has rebounded from the challenges faced in the previous year, reflecting the adaptability of both buyers and the real estate landscape.
Changing Buyer Behavior: TRREB President Jennifer Pearce highlighted the changing mindset of consumers, citing the market's assumption that the Bank of Canada has completed rate hikes. With anticipation of rate cuts in the future, homebuyers are adjusting their strategies. Some have saved up larger down payments, opted for less-expensive home types, or explored different GTA locations to manage monthly payments efficiently.
Price Movements and Projections
Stability in Selling Prices: Home selling prices in February 2024 remained comparable to the same month in 2023. The MLS® Home Price Index Composite benchmark showed a modest increase of 0.4%, with the average selling price reaching $1,108,720, reflecting a 1.1% growth. On a seasonally-adjusted monthly basis, both the MLS® HPI Composite and the average selling price exhibited upward movements.
Future Outlook: TRREB Chief Market Analyst Jason Mercer foresees an evolving market in 2024. As the year progresses, more buyers are expected to re-enter the market with adjusted housing preferences to accommodate higher borrowing costs. Lower interest rates in the second half of the year are anticipated to further boost demand for ownership housing, with first-time buyers playing a pivotal role in driving activity.
Addressing Housing Affordability Challenges
Impact of Unaffordable Housing: TRREB CEO John DiMichele emphasized the negative impact of unaffordable housing on both financial well-being and mental health. Recent research conducted for TRREB by CANCEA highlighted the importance of addressing housing affordability, as it not only has financial implications but also influences people's mental health and life satisfaction.
Positive Developments: DiMichele acknowledged the ongoing efforts in the GTA to eliminate red tape and meet homeownership needs. The provincial government's recognition and support for municipalities actively working towards this goal signify a positive step in addressing housing challenges.
Will the Toronto Housing Market Crash?
Looking Ahead: As we delve into the Toronto housing market forecast for 2024, the prevailing trends indicate a resilient and adaptable market. While challenges like higher borrowing costs persist, the proactive measures taken by homebuyers and the real estate industry suggest a market that is poised for growth. With an optimistic outlook for the second half of the year and anticipated lower interest rates, the Toronto housing market seems positioned for continued stability and expansion.
Sources:
- https://trreb.ca/index.php/market-news/market-watch
- https://wowa.ca/toronto-housing-market