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Toronto housing market slows in spring 2024 as listings surge and sales dip

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2024 may not be getting a “spring market”. In April 2024, the Toronto housing market saw a decline in home sales compared to April 2023, when we saw one of the strongest spring markets in Canadian history, measuring price growth from January to May 2023.

This muted demand was compounded by a substantial increase in new listings year-over-year, offering home buyers more options and resulting in a relatively stable pricing environment. The Toronto Regional Real Estate Board (TRREB) reported a five percent year-over-year decrease in sales, accompanied by a notable 47.2 percent rise in new listings. Despite a slight dip in sales compared to March, the trend of increasing new listings suggests that the market is favouring buyers as we head into summer.



Source: TRREB


Painful lesson learned: The type of economy that necessitates rate cuts


TRREB President Jennifer Pearce attributed this surge in listings to homeowners anticipating heightened demand for housing during the spring season. The data suggests that demand is absent this year, likely because of the slumping Canadian economy and an uncertain interest environment: 



Pearce suggested that while sales are expected to rise, potential buyers may be waiting for the Bank of Canada to initiate interest rate cuts before committing to a purchase. My suspicion is that the economy is learning the painful lesson about what kind of economy necessitates rate cuts — and it’s not a good one.

The MLS Home Price Index (HPI) composite benchmark experienced a marginal decline year-over-year, with the average selling price increasing slightly, as it typically does. Prices usually increase from January to May in any given year, but this year has been markedly slower than most.

TRREB Chief Market Analyst Jason Mercer noted that buyers benefited from increased choice in the market, resulting in minimal fluctuations in selling prices compared to the previous year. Looking ahead, Mercer predicts tighter market conditions and renewed price growth, especially with anticipated lower borrowing costs, though I’m not sure I agree with his optimism.


Recession headwinds move supply curve more than interest-rate optimism moves demand curve


I feel that the headwinds of recession in Canada appear to be moving the supply curve more than interest-rate optimism is moving the demand curve. Furthermore, the average mortgage renewing in 2025/2026 needs to see more like 350 basis points of rate cuts. A reduction of this magnitude seems unlikely unless we see a severe recession, which isn’t something anyone should be wishing for right now. 

Mercer emphasized the need for alignment in government policies to address affordability and housing supply issues effectively. He highlighted the importance of bringing enough housing online to accommodate future population growth while also balancing government spending to combat inflation. Alignment across housing policies is deemed crucial for achieving long-term affordability and choice for residents in the GTA.


The state of condominiums



In the first quarter of 2024, against the backdrop of record completions this year, the GTA witnessed a moderate increase in condominium apartment sales compared to the same period in 2023. However, this growth was overshadowed by a greater annual rise in the number of condominium apartment listings. With buyers enjoying more options, the average selling price of condominiums experienced a slight decline.

Total condominium apartment sales reached 4,747 in Q1 2024, marking a 5.3 percent increase year-over-year. Concurrently, new condominium listings surged by over 23 percent during the same period.

In Q1 2024, the average condominium apartment selling price in the GTA was $693,754, representing a one percent decrease compared to the same period in 2023. In Toronto itself, which accounted for most condominium sales, the average selling price was $723,186, down by 0.5 percent from Q1 2023.


In the first quarter of 2024, the Toronto housing market witnessed a significant increase in condominium apartment lease transactions, as reported by TRREB. Both the number of transactions and the volume of rental listings increased year-over-year, providing renters with more options and leading to stabilized average rents compared to the previous year.

Condominium apartment rental transactions rose by 19.7 percent to 12,541, while rental listings increased even more substantially, by 51 percent over the same period.

Despite the rise in rental supply, the average rent for a one-bedroom condominium apartment dipped slightly, by 1.2 percent to $2,441 in the first quarter of 2024, while the average two-bedroom rent remained unchanged at $3,139.


Looking ahead, Mercer anticipates continued absorption of available condominium units as the number of new households in the GTA continues to grow. He expects an increasing number of renters to transition into homeownership over the next year as borrowing costs decrease, narrowing the gap between rent and mortgage payments.


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