Toronto Real Estate Market Insights: September 2024 Review

As we enter the final quarter of 2024, the Greater Toronto Area (GTA) real estate market is showing continued signs of recovery, driven by favorable borrowing conditions and recent changes in mortgage lending guidelines. September 2024 saw a year-over-year increase in home sales, reflecting growing buyer confidence due to lower interest rates and improved affordability. While home prices remained relatively stable, the market's dynamics now favor buyers, especially in the condo and townhouse segments, which have become increasingly popular with first-time buyers.

Real Estate Market Activity

The Toronto Regional Real Estate Board (TRREB) reported 4,996 home sales in September 2024, marking an 8.5% increase from the 4,606 sales reported in the same period in 2023. This uptick reflects the ongoing impact of interest rate cuts by the Bank of Canada, which have gradually made mortgages more affordable, enticing a larger pool of potential buyers back into the market. Meanwhile, the number of new listings climbed to 18,089, a 10.5% increase from last year. This expanded inventory has helped balance the market, giving buyers more choices and reducing the fierce competition seen in previous years when supply was tight.

In terms of pricing, the average selling price in September 2024 was $1,107,291, a slight decline of 1% compared to $1,118,215 in September 2023. However, seasonally adjusted prices showed a slight increase from August 2024, suggesting some stabilization in the market. The balance between increased supply and stable prices is creating a more favorable environment for buyers, providing them with more opportunities to negotiate, especially in the condo and townhouse segments.

Supply and Demand Dynamics

The current market offers a more balanced scenario for buyers, with an increased supply of listings and more stable prices. Buyers, particularly first-time homeowners, now have more options and the leverage to negotiate better deals. This is especially true in the more affordable segments of the market, such as condominiums and townhouses, where price declines have been moderate. These segments have seen renewed interest as interest rate cuts make purchasing more feasible for a larger pool of buyers.

One of the more notable developments in September 2024 was the performance of the condo market. Condo sales increased compared to last year, but there was a slight dip from August to September 2024. This decline could be attributed to various factors, such as seasonal adjustments or buyer caution due to broader economic uncertainties. Despite this, condos remain a key option for both first-time buyers and investors, offering a more affordable entry point into the GTA housing market.

What’s Next for the GTA Market?

The future of the GTA real estate market remains cautiously optimistic, with key factors likely to shape its trajectory in the coming months. The Bank of Canada has implemented several interest rate cuts throughout 2024, and further reductions are anticipated before the year’s end. These cuts are expected to drive increased buyer activity, particularly in more affordable segments like condos and townhouses.

Although demand is expected to rise, the market still has a relatively high supply of listings. This balance between supply and demand should keep price growth modest in the near term, offering continued opportunities for buyers. One trend to watch is the performance of the condo market. While condo sales have risen year-over-year, they saw a slight dip from August to September 2024, potentially due to seasonal fluctuations or buyer hesitation. Despite this, condos remain an attractive option for first-time buyers as interest rates stay low.

Infrastructure developments, like the Crosstown LRT, are also expected to drive future demand by improving connectivity in key neighborhoods, which could raise both property values and sales. Additionally, policies targeting the supply of family-friendly homes and reducing development charges may further boost the market by making homeownership more affordable for young families and first-time buyers. 

As the market stabilizes, there's potential for the current surplus of listings to be absorbed. If demand outpaces supply, upward pressure on prices could emerge moving into 2025. While the current market favors buyers, this window of opportunity may narrow as supply tightens and prices potentially climb.

Impact of Policy Changes

Recent changes to mortgage lending policies are having a significant effect on buyer behavior. TRREB has long advocated for more flexible mortgage renewal processes, and September saw the introduction of key updates. Existing mortgage holders can now shop around for better interest rates without facing the previously required stress test. This is expected to lead to more affordable mortgage renewals, improving financial stability for many homeowners.

A notable policy shift is the extension of amortization periods, now up to 35 years, offering buyers more flexibility with their monthly payments. By reducing the immediate financial burden of homeownership, longer amortization periods make it more attainable for a wider range of buyers, particularly in a market with historically high prices. Additionally, a change allowing mortgage insurance on homes priced over $1 million opens new doors for buyers who were previously excluded from insurance options on higher-priced properties. With the average home price in the GTA consistently near the million-dollar mark, this shift is set to make the homebuying process easier for many.

Strategic Opportunities for Investors

With stable prices and historically low interest rates, now is an ideal time to strategically invest in the market. Investors should consider focusing on properties with strong long-term growth potential, particularly in up-and-coming areas poised for development. Strategic investments in locations connected to key infrastructure or areas where policy changes could drive future demand offer promising returns. Additionally, extended amortization periods and flexible mortgage lending guidelines create favorable conditions for investors looking to manage their costs effectively and successfully yield significant long-term returns.

Source: TRREB - Market Watch