For the first time in decades, Toronto real estate is in a buyer’s market.

October marks another month of bad records for Toronto real estate. With sales down 5.8 per cent since the same month last year, the region has posted one of the lowest numbers of October home sales to date. This suppressed sales figure is a clear sign that the Toronto real estate market is in a state of recession.

More inventory, fewer sales

Alongside these record-low sales, we’re seeing inventory grow substantially. Monthly new listings are up 38 per cent compared to October of last year, which is in line with the long-term average.

Breaking out above the long-term average, active listings are 50.1 per cent higher this October than in October of 2022, signalling a market where supply is not being absorbed, so sellers are leaving listings in the market. Should this inventory continue to pile up, the market could sway further in favour of buyers over the winter months.

Combining this supply trend with falling demand brings us to a buyer’s market territory based on both months of inventory and sales-to-new-listings ratio.

Stable prices for now – but what’s next?

House prices have been relatively stable and hovering above the long-term trendline. This indicates the buyers’ market hasn’t necessarily resulted in buyers dictating the price discovery of Toronto real estate heading into the slower winter months.

Time will tell whether or not we return to the long-term trendline, but it would not be unreasonable to expect a market to trade sideways for the foreseeable future, to catch that trendline in several years’ time. After all, the last major housing cycle in Canadian real estate in the 1990s culminated in a sideways market for 2-3 years once the “bottom” was in.

Charts source: Chartography.ca