Toronto Real Estate Market Insights: May 2024 Review

The Toronto real estate market continues its subdued spring performance, characterized by a significant drop in sales yet a simultaneous surge in new listings. This trend, as reported by the Toronto Regional Real Estate Board (TRREB), signals a shift in power towards buyers, who are now enjoying increased negotiating leverage and a wider array of housing options.

Real Estate Market Activity

Supply and Demand Dynamics

May 2024 continued the trend of low home sales. With 7,013 home sales recorded, there was a notable 21.7% decline from May 2023. This decrease in sales is largely attributed to the persistently high mortgage rates, which have kept potential buyers on the sidelines. Many had adopted a "wait-and-see" approach, anticipating a decline in borrowing costs before entering the market. 

TRREB President Jennifer Pearce remains optimistic, citing polls indicating a pent-up demand that is expected to materialize as mortgage rates ease in June and  the coming months. This influx of buyers, particularly first-time homeowners, could potentially alleviate the pressure on the currently tight rental market.

Adjustments and Expectations

Despite the slowdown in sales, the average selling price in the GTA experienced a marginal year-over-year decrease of 3.5% according to the MLS® Home Price Index Composite benchmark. This suggests a market adjusting to the prevailing high-interest rate environment, offering a silver lining for buyers benefiting from slightly lower costs.

One of the most notable trends in May was the significant increase in new listings. GTA REALTORS® reported 18,612 new listings, marking a 21.1% increase from May 2023. This influx of new listings provides buyers with more options and could be a strategic move by sellers anticipating a future rise in demand.

TRREB Chief Market Analyst Jason Mercer anticipates further improvement in affordability as borrowing costs decline. However, he cautions that increased competition among buyers, as demand picks up, could reignite upward pressure on prices.

Seizing Opportunities in a Shifting Market

The recent 0.25% interest rate drop by the Bank of Canada to 4.75% has injected optimism into the real estate market. Buyer activity is expected to rise, leading to potential price hikes. Investors should closely monitor these trends for attractive entry points. John DiMichele, TRREB CEO, emphasizes the need for coordinated government action to address housing supply and infrastructure, crucial for the region's economic health and livability. Increased listings and slight price adjustments present unique investment opportunities. Strategic patience and proactive planning are essential for investors to capitalize on the evolving market dynamics.

Source: TRREB - Market Watch