Toronto Real Estate Market Insights: October 2024 Review

As the year winds down, the Greater Toronto Area (GTA) real estate market has shown remarkable resilience, driven by more favorable borrowing conditions and heightened buyer interest. October 2024 stands out as one of the strongest months for home sales in recent years, with both buyers and investors capitalizing on an environment shaped by recent Bank of Canada interest rate cuts and a stable, yet competitive, supply of listings. This article delves into October’s market performance, evaluates current trends in supply and demand, and provides a forward-looking perspective for those exploring strategic investment opportunities.

Real Estate Market Activity

The latest data from the Toronto Regional Real Estate Board (TRREB) highlights significant growth in October’s home sales. With 6,658 transactions recorded—a 44.4% year-over-year increase from October 2023—buyers appear to be moving off the sidelines and re-entering the market in large numbers. This surge in demand is a direct response to the Bank of Canada’s series of interest rate reductions throughout 2024, which has improved mortgage affordability and drawn new and returning buyers into the GTA housing landscape.

In parallel, new listings rose to 15,328, marking a 4.3% year-over-year increase. While inventory has expanded, this increase is moderate compared to the surge in sales, leading to a gradual tightening of market conditions. Notably, the average selling price in October was up 1.1% from the previous year, reaching $1,135,215, suggesting that while demand is robust, the market’s supply has managed to keep price growth contained.

Supply and Demand Dynamics

October’s activity reflects a market that is growing increasingly competitive yet remains balanced due to steady inventory levels. With buyers gaining access to more favorable mortgage rates, demand is expected to continue rising. This dynamic has particularly benefited entry-level market segments, where condos and townhouses have drawn significant interest from first-time buyers and investors seeking value.

The consistent addition of listings has helped maintain a diverse market, providing choices for prospective buyers while tempering sharp price increases. TRREB analysts note that the ongoing stability in the market’s supply-demand balance will likely keep price growth moderate in the near term. However, if demand continues to rise and inventory levels decrease, we may see increased upward pressure on prices as we move into 2025.

The Role of Rate Cuts in Market Recovery

October’s significant uptick in sales activity can be directly linked to the Bank of Canada’s progressive reduction of interest rates. With the latest cut bringing the key lending rate to 3.75%, mortgages have become more affordable, a welcome shift after rates reached a high of 5% earlier in the year. Lower borrowing costs have made homeownership a feasible option for many who previously felt priced out of the market.

As TRREB President Jennifer Pearce explains, “The positive affordability picture brought about by lower borrowing costs and relatively flat home prices has prompted this improvement in market activity.” With rates likely to stay low, analysts anticipate sustained buyer interest, especially in the condo and entry-level market segments.

What’s Next for the GTA Market?

Looking ahead, the GTA real estate market is expected to maintain its cautiously optimistic outlook as we approach 2025. With the Bank of Canada’s rate cuts creating a more affordable borrowing environment, demand is likely to remain elevated, particularly for homes in the more affordable segments. However, the current inventory of listings will play a crucial role in moderating price growth, at least in the short term.

While October’s sales surge reflects strong momentum, TRREB Chief Market Analyst Jason Mercer warns that, “As inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.” Given that GTA’s population is expected to keep rising, especially in high-demand urban areas, the need for new housing remains critical. Without increased construction, existing inventory will gradually deplete, resulting in tighter market conditions and potentially accelerated price growth.

Policy changes are also poised to play a significant role in the market’s trajectory. Federal and provincial policymakers are focusing on affordability measures aimed at aiding first-time buyers and increasing the availability of family-friendly housing. TRREB CEO John DiMichele has voiced support for initiatives like removing the GST on new homes under $1 million, as well as extending this rebate for homes between $1 million and $1.5 million. Such measures could incentivize the development of new housing stock, helping to alleviate some of the pressure on the current inventory.

Additionally, major infrastructure projects, including the Crosstown LRT, are expected to enhance the appeal of connected neighborhoods by improving transit access. This may further drive demand in specific areas, potentially increasing property values as these projects reach completion.

Strategic Opportunities for Investors

The current GTA real estate environment presents a rare window of opportunity for strategic investors. With stable prices and historically low interest rates, the market is positioned for long-term gains. Investors are advised to consider areas where upcoming infrastructure projects, such as transit expansions, will drive increased property demand. Properties near these developments not only offer strong growth potential but are also likely to see appreciation as connectivity and neighborhood amenities improve.

The period leading up to spring 2025 may prove advantageous for investors looking to enter the market before inventory constraints push prices higher. Extended amortization periods and favorable mortgage terms also make it possible to manage costs effectively, allowing for better cash flow and potential long-term returns. 

For those interested in maximizing returns, townhouses in up-and-coming neighborhoods represent a particularly strong investment option with an appealing balance of affordability and space, attracting families and individuals seeking more room without the higher costs associated with detached homes. In fact, in the October 2024 TRREB market data, townhouses led the charge with a remarkable 56.8% growth, followed by detached homes at 46.6%, semi-detached homes at 44%, and condos with a 33.4% year-over-year increase in sales. Areas benefiting from infrastructure improvements or increased amenities, such as the GTA’s expanding transit network, are likely to see substantial interest from both renters and buyers, which can enhance property values over time.

With a stable yet competitive market ahead, the GTA continues to offer strong opportunities for those looking to make thoughtful, informed decisions. Whether for personal use or investment, the current landscape provides a foundation for growth, making it an ideal time to explore Toronto’s diverse and promising real estate market.

Source: TRREB - Market Watch