Toronto Real Estate Market Insights: August 2024 Review

In August 2024, the Greater Toronto Area (GTA) real estate market displayed a blend of stability and shifting trends. While home sales decreased compared to the previous year, the market remained well-supplied, providing buyers with an advantage that has been rare in recent years. This balanced environment, coupled with recent interest rate cuts, has set the stage for both buyers and investors to navigate opportunities with a renewed sense of optimism, as we head toward the close of 2024.

Real Estate Market Activity

Supply and Demand Dynamics

The Toronto Regional Real Estate Board (TRREB)  reported 4,975 homes sold in August 2024, marking a 5.3% decrease compared to the same period in 2023. Despite this year-over-year drop, sales saw a slight 0.6% uptick from July when adjusted for seasonality. New listings increased marginally by 1.5%, totaling 12,547, reflecting a relatively stable inventory. This increase in supply has contributed to the current buyer-friendly market, where more options are available and price growth remains contained.

The average selling price dipped slightly by 0.8% year-over-year to $1,074,425 while the MLS® Home Price Index Composite benchmark, which captures broader trends in typical homes, fell by 4.6%. These figures suggest that while prices are softening, they haven’t experienced drastic declines, offering a stable environment for buyers. While sales numbers fell, the relatively higher supply of listings gives buyers more options, particularly in a climate where interest rates have been fluctuating. 

What’s Next for the GTA Market?

Looking ahead, the GTA real estate market’s prospects are cautiously optimistic. While the market currently favors buyers, this might not last. As borrowing costs decrease, demand is expected to rise. However, the ample inventory of listings will help moderate price growth in the near term. Even as buyer activity increases, it will take time for the market to absorb the available supply, ensuring that price increases remain modest. But as supply eventually dwindles, the market could experience a shift, with upward pressure on prices returning, particularly as we move into 2025.

The long-term outlook for the GTA market is further strengthened by strategic policy initiatives and infrastructure developments that are expected to drive future growth. For example, discussions around reducing development charges and implementing more family-friendly housing policies could increase housing stock and affordability. Additionally, major infrastructure projects, such as the opening of the Crosstown LRT, are anticipated to boost property values in the areas they connect, creating new opportunities for both buyers and investors.

Anticipated Trends:

• Interest Rates: The September 4 announcement of a third consecutive interest rate cut by the Bank of Canada, lowering the key lending rate to 4.25%, is expected to lower mortgage rates further, making borrowing more accessible, especially for those using variable-rate mortgages, which reduces monthly payments and improves affordability.

• Demand Surge: As mortgage rates continue to decline, buyer activity, especially from first-time buyers, is projected to increase, particularly in the condo and entry-level segments.

• Market Recovery: TRREB President Jennifer Pearce highlighted that affordability is expected to improve further, especially in the next 18 months. This trend will attract more buyers into the market, fueling a gradual recovery.

Strategic Investor Opportunities

For investors, the current market conditions present a prime opportunity to make strategic purchases. With prices relatively stable and interest rates trending downward, acquiring properties now could lead to significant returns as demand begins to rise in the coming months and years. The current market cool-down offers a rare chance to buy before prices begin to climb again, particularly as investor sentiment improves with the prospect of more favorable borrowing conditions. Properties purchased now, especially in areas with upcoming infrastructure developments or those expected to experience renewed demand, could appreciate significantly over time.

Source: TRREB - Market Watch