Toronto Real Estate

MARKET REPORT MAY 2024

FOREWORD

The general believe was that the Toronto housing market was heading for a spring surge - instead it has hit a standoff.

The resale condo market has seen a 66% increase in inventory, outpacing demand. Despite this, an uptick in resale condo sales has resulted in only marginal price declines, signaling stability. The most active sales are below $900,000, with end-users remaining the primary buyers.

There seems to be “a timing issue” between sellers and buyers, as buyers were expected to jump into the spring market before interest rate cuts fearing it would spur skyrocketing home prices. It did not happen, as buyers need to see a tangible change in interest rates; there’s still too much uncertainty.

While economists forecast the Bank of Canada could cut rates as early as June, there’s no guarantee. This year the language from the bank is less definitive, cooling sales activity. Generally speaking, buyers are benefiting from ample choice in the Toronto resale market, as a result there was little movement in selling prices in April compared to last year.

Market conditions aren’t tightening up yet, but once the Bank of Canada cuts rates there is an expectation of increased buyer activity in the last six months of the year, which will result in renewed price growth, especially as we move into 2025.

Sellers, keep your property on the market if you want to sell but know that the market will begin to improve by mid year, price at current market value and stand your ground if you can.

The clock is ticking for buyers. Anyone who wants to take advantage of fatigued sellers may only have a few weeks to do so.

Let’s talk. 647-223-0562 or at victor.alvarez@bell.net

SALES SUMMARY

Toronto Real Estate Market Report May 2024

Typical of a seasonal spring, home and condo listings surged in April, up 47.2% from last year, and this trend is expected to continue in May. With the new level of supply, the market has shifted towards a more balanced state, with some sectors like condos leaning closer to a buyer’s market. The increase in inventory, providing more choices, has made prospective buyers the biggest winners. Although April’s sales this year were lower compared to the same time last year, these numbers do not reflect the high interest levels, as demonstrated by the significant number of property showings booked by buyers. This indicates confidence among buyers who are either waiting for the right moment to enter the market or have yet to find their ideal property.

Buyer feedback suggests that the prolonged period without interest rate cuts has encouraged them to take their time and not feel pressured to make quick decisions. Many are choosing to wait on the sidelines in anticipation of a possible further decline in real estate values. Unfortunately, these buyers have not yet seen the anticipated opportunity materialize, as real estate values have remained steady or even witnessed slight increases. While some homes have lingered on the market for extended periods, those in desirable locations, move-in-ready condition, or unique features are often selling quickly, sometimes with multiple offers. This mixed market scenario indicates that buyers are positioning themselves ahead of potential future rate cuts.

Furthermore, luxury real estate in the $3 million to $5 million range has remained active, unaffected by interest rate fluctuations in buyers’ decisions.

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PRE-CONSTRUCTION AND CONDOS

The resale condo market has seen a 66% increase in inventory, outpacing demand. Despite this, an uptick in resale condo sales has resulted in only marginal price declines, signaling stability. The most active sales are below $900,000, with end-users remaining the primary buyers. This trend does not discount resale condo investors, who are considering re-entering the market. Experienced investors understand that real estate is a safe and secure hedge against inflation.

Developers of pre-construction projects have significantly slowed down, essentially halting operations in the first quarter of 2024. This contrasts with the government’s policy initiatives aimed at faster housing construction and increased affordability. Although sales of brand-new condos have declined and unsold inventory has risen to over 23,000 units, builders anticipate a swift absorption rate once interest rates begin to decrease. Investors predict that this reduced construction activity will drive prices higher in the coming years. Forecast models suggest that only 5,000 completed units will enter the market by 2028, signaling a rebound in values that will likely surpass previous highs.

RENTAL COMMENTARY

Toronto saw a 19.7% increase in condo apartment leases year-over-year, totaling 12,541. This surge was accompanied by a 51% rise in rental listings, providing renters with more choices and stabilizing average rents. Specifically, the average rent for a one-bedroom condo decreased by 1.2% to $2,441, while two-bedroom rents remained steady at $3,139. Growing inventory has helped moderate rental prices despite increased demand due to population growth in the GTA. Expect the trend of rising condo inventory to continue, as more renters are expected to transition to homeownership as borrowing costs decline.