• Interest Rate Reduction: The Bank of Canada cut the policy interest rate by 25 basis points to 4.25% on September 4th, 2024. This is the 3rd consecutive rate cut since June 2024. Their next upcoming meeting is on October 23rd, 2024.
• Inflation Watch:  Inflation decreased to 2% in August from 2.5% in July. This kept inflation inside the Bank of Canada’s target range (1-3%) for the 8th consecutive month and marks the first time we’ve hit the Bank of Canada’s target since 2021. September’s inflation report will be released on October 15th before the next BoC meeting.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 4.59% (source: ratehub.ca).

The fall market officially kicked off last week, but it doesn’t quite feel like it yet. Maybe it’s the lingering heatwave that feels more like July than September playing tricks on me, but the market feels a bit slow despite listings being up from July and August levels. 

It’s not that we have an inventory issue—new listings are somewhat in line with what we saw last September, and inventory continues to build. But offer nights have been somewhat uneventful, and it seems we may be seeing a shift from offer dates to “offers anytime,” depending on the property type. 

With October typically being the busiest month, there’s still plenty of time for things to pick up as we move further into the fall market.

It feels like the market is in a place very reminiscent of September/October 2023, however, a mix of macroeconomic factors and some new federal policies seem to have the spring 2025 market primed for a rebound:

1) Inflation Hit 2% Target Sooner Than Expected

In August, the inflation rate dropped to 2%, which was a big milestone considering the Bank of Canada wasn’t expecting to hit that target until the second half of 2025. In fact, the drop was even steeper than the 2.1% that economists predicted.

One month at 2% doesn’t mean we’re in the clear just yet, but we’ve still got three more inflation reports before the end of the year to see if we’re actually trending at or below the target.

If inflation keeps falling and the job market continues to cool, the Bank of Canada may feel pressured to speed up rate cuts to avoid a recession. Some economists are already predicting a larger 50 basis point cut in October, with a total of 75 basis points by the end of the year.

If they do cut rates faster, that’s the first key factor that could drive a spring market rebound.

2) Higher Price Cap for Insured Mortgages

Starting December 15th, 2024, the federal government is raising the price cap for insured mortgages from $1 million to $1.5 million.

Right now, if you’re buying a home priced above $1 million, you need a 20% down payment. That’s a lot of liquid cash to have ready—for example, $300k for a $1.5 million home—before you even factor in other costs like land transfer tax.

With the new cap, buyers with strong incomes and good credit but smaller down payments (e.g., 10%) will be able to qualify for a mortgage without needing years to save the extra $150k. This change could bring a lot of new buyers into the market sooner, and that’s the second factor fueling a stronger spring market.

3) 30-Year Amortizations for First-Time Buyers

The government also announced that 30-year amortizations for first-time homebuyers will now apply to all home types, starting December 15th, 2024. Previously, this extended amortization was only for new builds (as of August 1st, 2024).

The key here is that stretching a mortgage over 30 years lowers monthly payments, which helps offset the impact of larger mortgage balances from putting down a smaller downpayment. This should allow more first-time buyers to qualify, adding even more competition to the spring market—our third major catalyst.

What’s Next: A Recipe for a Spring 2025 Rebound

With inflation and rates dropping faster than expected, we’ll likely see two more rate cuts before the spring market kicks off. Lower rates, combined with the new price cap and extended amortization rules, will make mortgages more affordable just as a wave of new buyers enters the market.

The big question is: How many new buyers are we talking about? Thousands? Tens of thousands? More?

For buyers who already have their down payment and finances in place, fall might be a good opportunity to get ahead of the competition before these new rules take effect.

That said, inventory could be tight this fall if sellers decide to wait until 2025, hoping for a larger pool of buyers to push up their home prices.

All of this is part of a bigger picture. The Toronto real estate market is complex, and what works for one buyer or seller might not work for another. If you’re trying to figure out what’s best for you, feel free to reach out—I’m happy to help navigate the specifics.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post Is the Toronto Real Estate Market Primed for a Rebound in Spring 2025? appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Reduction: The Bank of Canada cut the policy interest rate by 25 basis points to 4.75% on June 5th, 2024. This is the first rate cut since March 2020, and is a significant moment for the housing market since this aggressive rate-hike cycle started in early 2022. Their next upcoming meeting is on July 24th, 2024.
• Inflation Watch:  Inflation decreased to 2.7% in April from 2.9% in March. This kept inflation inside the Bank of Canada’s target range (1-3%) for the 3rd consecutive month. May’s inflation report will be released on June 25th
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 4.84% which has been stagnant for the last two months (source: ratehub.ca). With many homeowners refinancing this year, we could see buyer’s start pivoting to variable rate mortgages if they believe rates will continue to be cut. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

The news has been bombarded with articles about the Bank of Canada’s recent interest rate cut which has been hotly anticipated throughout the spring market. While I won’t go into too much detail on this market update, I wrote some of my thoughts on what it means for the market in this blog post.

I’d recommend taking a look if you’re thinking about, or in the process of buying or selling as I go over past rate-cutting cycles and what has happened historically.

May TRREB Stats

Right now I want to talk about the current state of the market as we potentially venture into a rate-cutting cycle. The May TRREB stats were released on the same day as the interest rate announcement, and they don’t look great on the surface for a month that is generally strong in the spring market.

I’ve felt some softening in competition among buyers over the last two months. Inventory is up and sales are down, but despite that prices are holding up well considering supply is outweighing demand.

Average Sale Price

The year-over-year average sale price across TRREB is down 2.54% from May 2023, and about flat in Toronto (see table below)

Average Sale Price Year-over-year (All Property Types, May 2024 vs May 2023)

I think there is some significance that year-over-year prices have remained flat in Toronto considering that in May 2023 the interest rate was at 4.5%, 50 basis points lower than in May 2024 (5%), with no sign back then that the Bank of Canada was finished hiking rates.

We do have to factor in year-over-year inflation when analyzing annual statistics. In this context, the Toronto market hasn’t kept pace with annual inflation, indicating that the market is effectively down compared to last May.

If we break down the proportion of sales of different property types in May 2024 vs May 2023, lower Condo sales and a higher proportion of Freehold sales (detached, semi-detached) are likely playing a role (see table below).

Proportion of Sales by Property Type Year-over-year (Toronto, May 2024 vs May 2023)

In May 2024, Freehold sales made up 41.65% and Condo sales made up 48.02% of sales whereas in 2023 Freeholds made up 38.24% and Condo sales made up 51.57%.

Higher Freehold sales in May 2024 will skew the average sale price higher, so considering these two factors, I think real appreciation/depreciation is probably lower than what the data shows.

Month-over-month prices have stayed fairly flat across TRREB, but Toronto has seen some better appreciation with a 3.5% increase in Toronto. (see table below)

Average Sale Price Month-over-month (All Property Types, May 2024 vs April 2024)

But again, the proportion of property types sold is probably playing some role here. The proportion of Freeholds to Condos was higher in May 2024 than in April 2024 (see table below).

Proportion of Sales by Property Type Month-over-month (Toronto, May 2024 vs April 2024)

All this being said, I would actually expect prices to have come in softer based on the Sales and New Listings data.

Supply & Demand (Sales to New Listings)

If we look at the table below, you can see that we had 22% fewer sales across TRREB, and 18% fewer sales in Toronto this May compared to May 2023.

Sales Year-over-year (All Property Types, May 2024 vs May 2023)

But we had 22.5% more listings across TRREB, and 28% in Toronto (see table below).

New Listings Year-over-year (All Property Types, May 2024 vs May 2023)

Supply is seriously outweighing demand right now based on this data. If we view this as a Sales-to-New-Listing Ratio (SNLR), we’re at 37.7% across TRREB and 36.7% in Toronto, compared to May 2023 where the SNLR was 59.3% across TRREB and 57.3% in Toronto (see table below).

Sales to New Listings Ratio Year-over-year (All Property Types, May 2024 vs May 2023)

That’s the lowest SNLR in the month of May in the last 20 years and firmly indicates a Buyers market. Despite that, prices have held up well overall, and actually increased month-over-month in Toronto as I said earlier.

So what’s happening here? The New Listings stat is partially misleading.

A common practice among realtors is to refresh their listings by canceling and re-listing them on MLS. Instead of making a price change, re-listing categorizes the listing as a New Listing, pushing it to the top of MLS search results and resetting the Days on Market to zero. This makes the listing appear fresh in buyers’ MLS feeds.

While this strategy effectively attracts fresh eyes to a listing, it has a downside: TRREB double-counts the listing. For example, if a house was listed in April, didn’t sell, was canceled, and re-listed in May, it would count as a New Listing in both April and May.

You can see in the table below this was indeed the case in May 2024. The share of new listings that were re-lists was right around 24%, compared to 11% in May 2023 where most of the New Listings were actually “new”.

Adjusted Sales to New Listings Ratio Year-over-year (All Property Types, May 2024 vs May 2023)

As a result, the Sales-to-New-Listing Ratio is closer to 50% in reality which shows a more balanced market – the imbalance of supply and demand is not as severe as it seems.

Final Thoughts

Quality properties in desirable areas are still receiving multiple competitive offers when priced correctly. Some buyers have been anticipating rate cuts throughout the spring market, creating competition for these properties as they try to purchase before rates potentially decrease and competition intensifies.

Even though there is more supply right now than a year ago, rates were on the way up last year, whereas the forecast in spring 2024 has been for rate cuts. I think this is why prices have held up well overall despite supply and demand stats that would suggest otherwise.

With economists predicting another 50 basis points of cuts by the end of 2024, what will this mean for the market moving into summer, fall, and next spring?

To understand what may happen in the future, we have to look at past rate-cutting cycles and how they impacted the real estate market. For more on that topic, read this blog post.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post June 2024: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

How will the rate cut impact mortgages?

Fixed Rates

The BoC’s policy interest rate does not directly impact fixed mortgage rates, which are benchmarked against Government of Canada bond yields. The primary factor influencing bond yields is inflation: when inflation is high, bond yields increase, leading to higher mortgage rates; when inflation decreases, bond yields typically follow, resulting in lower mortgage rates. 

While inflation drives both bond yields and the BoC’s decisions to adjust the policy interest rate, they operate at different speeds. Generally, fixed and variable rates tend to move in the same direction.

Variable Rates

The BoC’s policy interest rate directly changes variable mortgage rates, altering payments with each hike or cut. This 25 basis point cut will have only a minor effect on payments.

In the first two scenarios above, the difference in monthly payments is $121. This is insignificant when compared to the $2,161 less a family would have been paying at the start of 2022 (bullet #3 above).

As mentioned earlier, the importance of this rate cut lies more in its psychological impact and influence on market sentiment than in any significant dollar savings.

What happened in past rate cutting cycles?

In the years that followed the previous rate-cutting cycles in 2008, 2014/2015, and 2020 year-over-year average price increases ranged between 5% and as high as almost 33%.

I’m not saying that will happen this time, but history often rhymes. The chart below illustrates how a decline in interest rates has historically been followed by a period of rapidly rising prices and competition.

Waiting for rates to fall — a catch-22?

If a similar scenario occurs today, is it better to wait for rates to fall further (which will take time) or to buy now before prices appreciate and competition intensifies?

Many economists expect an additional 50 basis points of cuts by the end of 2024, bringing the policy rate to 4.25% by 2025. Assuming fixed rates fall in tandem with the policy rate, I want to look at a few simple scenarios to see if playing the waiting game would be the best financial option.

Even in the most favourable scenario (#3) where rates somehow fall to 3.5% by 2025, and prices only appreciate 5%, you’d only be saving $5,000 by the end of your 5-year term when factoring in average sale price appreciation between now and the start of 2025.

Prices have already appreciated 5.8% in Toronto since the peak of the fall market in October 2023, despite some of the worst market conditions in the last 10 years.

Is 5% appreciation by 2025 out of the question? I don’t think so if we’re entering a rate-cutting cycle.

Are 3.5% mortgage rates likely by the start of 2025? Maybe if we’re lucky.

And when you factor the following factors when waiting for rates to fall and the potential of prices appreciation:

• Increased land transfer tax on a higher purchase price
• Coming up with tens of thousands extra for your down payment
• Carrying a higher mortgage balance over the life of the loan
• Increased competition when the market starts ramping up

Any benefits of a lower rate over the next five years quickly diminish, or at the very least, look riskier. Additionally, it’s important to remember that once you have a mortgage you can always refinance in the future to take advantage of lower rates while working with a smaller mortgage balance.

There is a saying in our industry…

“Marry the house, date the rate.”

These scenarios are just simple illustrations, so it’s essential to consider the specific price point, property type, and areas of the city you are buying or selling in. It definitely merits a more detailed conversation based on your unique situation.

If you have questions about your specific situation, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post What the Bank of Canada Interest Rate Cut Means for the Toronto Real Estate Market appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% on April 10th. Their next upcoming meeting is on  June 5th, 2024.
• Inflation Watch: Inflation increased to 2.9% in March from 2.8% in February. This kept inflation inside the Bank of Canada’s target range (1-3%) for the 2nd consecutive month. April’s inflation report will be released on May 21st
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 4.84% (source: ratehub.ca) which is the first time I’ve seen one below 5% in over a year. This continues the downward trend on fixed rates. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

Slight change to the format this month. Before my April market update, I want to quickly cover some items of interest in this year’s federal budget as it pertains to housing and real estate.

The Federal Governments goal is to build 4,000,000 new homes by 2031 since supply is the biggest factor when it comes to affordability right now. They plan to do this through various means, including:

• converting government-owned properties into residential housing
• removing red tape for builders (details are sparse here)
• providing low-cost loans to builders
• Building more essential infrastructure like power lines, transit, water, wastewater, etc in areas where these homes will be built

How realistic their goal is remains to be seen. Right now we build about 200,000 new homes a year. At that pace, we would be at about 1,200,000 homes by 2031. That means they would need to build about 233% more homes a year (a total of 670,000). Seems like a pretty big stretch.

This also doesn’t help with short-term affordability, so what changes have they proposed that help buyers today?

Federal Budget Announcements Related to Housing

RRSP Withdrawal Limit Increase

This is actually a big one considering how pricey down payments are getting in the GTA. The plan is to increase the RRSP Withdrawal Limit from $35,000 to $60,000. They are also extending the grace period for when this needs to be paid back. 

Typically this money needs to be put back into your RRSP over a 15-year period, the first repayment due the second year after the withdrawal was made. Under the planned budget, this grace period would increase to 5 years before the first repayment needs to be made.

This means a couple could use up to $120,000 from their RRSPs, and if they have been contributing the maximum $8,000 a year to their FHSA could access an additional $32,000 of tax-free money to their downpayment.

30-year mortgages for first-time homebuyers purchasing new builds

The Federal Goverment is planning to bring back 30-year amortizations as of August 21st, 2024. This is to help with monthly mortgage payment affordability, but only under specific conditions:

• Must be a first-time homebuyer
• Must be purchasing a new build or pre-construction property
• Must be an insured mortgage (less than 20% down payment)

This mortgage amortization relief may also be available to existing homeowners who meet specific eligibility criteria (though I wasn’t able to find what those criteria are). This could help existing homeowners lower monthly mortgage payments by extending their mortgages until we are in a more favorable interest rate environment.

Increase on capital gains tax inclusion rates

The capital gains tax inclusion rate will increase from 50% to 66.6% on any capital gains above $250,000 for individuals, corporations and trusts. This would come into effect June 25th, 2024 if approved.

I’d like to note, this does not change the capital gains exemption on primary residences.

In terms of real estate implications, this will have the biggest impact on people who own a secondary residence like a cottage or an income property that has had significant appreciation since purchasing. We may see some of these individuals try to offload secondary properties before the higher tax comes in.

For example, if you had $500,000 of capital gains on the sale of a secondary property. $125,000 (50%) of the first $250,000 would be eligible to taxation and $166,500 (66.6%) on the second $250,000 would be eligible to taxation.

That works out to $250,000 being eligible for taxation before June 25th, and $291,500 after. This would be taxed at your marginal tax rate. 

If you have concerns about these changes, I would be happy to discuss them and I will get any answers I can about these changes from my tax expert!

Restrictions on Corporations buying single-family homes

There is a big problem in the United States with Hedge Funds, and Real Estate Investment Trusts (REITs) buying up single-family homes as speculative assets.

The Federal Government is getting ahead of that trend in Canada proposing restrictions to these types of buyers so that you’re not competing against multi-billion dollar corporations on offer nights! 

Overall these are positive short-term changes, but it’s likely to be years before we see any of these plans help with housing affordability, since supply is the problem and it takes time to build them!

April Market Update

As you know, I love to watch offer nights when I’m not participating in them to get an idea of buyer sentiment and where the market is headed.

Over the last 2-3 weeks of April I have started to feel a shift in the market that I did not anticipate based on the TRREB numbers that came out in March. March is typically one of the slower months in the spring market because of Easter Weekend and March Break. 

This past March was REALLY slow historically speaking. The 2nd lowest sales ever in the month of March (next to 2009), and the 4th lowest New Listings (March 2023 was the lowest, and 2002, 2003 were the 2nd and 3rd). The lack of inventory is the reason the market is so sluggish right now.

With March being so slow, I was anticipating a spike in activity in April, especially because there are no school or public holidays. Instead, I am seeing fewer and fewer offers come in on offer nights I am watching.

10/10 houses are still getting all the love and doing really well. So much so that one of my clients snagged a beautiful home in multiples earlier this month, and shortly after,  we were approached by the 2nd place buyer offering them an extra $50,000 to assign them the sale. That’s how scarce quality inventory is!

Alternatively, B-tier homes that were fetching a high number of offers and performing well in early 2024 are experiencing failed offer nights and being re-listed over the last 2-3 weeks.

It’s honestly a bit confusing out there right now. I don’t know if we can expect this slow-down to last, but there does seem to be some preliminary indication of softer conditions for buyers out there right now while we wait to hear what the Bank of Canada will do in June.

The BoC will have another inflation report, and more employment data to work with by their next meeting, and Tiff Macklem has stated recently that a rate cut in June is in the realm of possibilities.

If a rate cut does happen, buyers who didn’t take advantage of the soft conditions right now might be kicking themselves in a few months.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

March 2024 TRREB Stats

Average Sale Price

As I mentioned, March is typically one of the slower months in the spring market because of Easter and March Break. That being said, we did see an increase in Average Sale Price of +1.16% across all TRREB and +1.35% in Toronto.

Average Sale Prices Month-over-month (All Property Types, March 2024 vs February 2024)

Comparing to March 2023 sales prices stayed fairly flat across TRREB with a year-over-year increase of 1.17%. Toronto faired better with a 3.08% increase (see table below).

Average Sale Prices Year-over-year (All Property Types, March 2024 vs 2023)

New Listings

New listings continued to remain low, but did see a month-over-month increase of 15.13% from February across all TRREB and 13.11% in Toronto.

New Listings Month-over-month (All Property Types, March 2024 vs February 2024)

We also saw a year-over-year increase of 17.31% across all of TRREB and 13.87% in Toronto (see table below).

New Listings Year-over-year (All Property Types, March 2024 vs 2023)

While these percentages might seem big, historically speaking the number of new listings is very low.

Sales

Month-over-month sales increased 17% across TRREB 17.1% in Toronto vs February (see table below). Take this with a grain of salt, because sales were also historically low in February so 17% isn’t a huge increase. For context we saw a 42% increase from February 2021 to March 2021 at the peak of the market, which is more typical historically speaking.

Sales Month-over-month (All Property Types, March 2024 vs February 2024)

Year-over-year sales decreased 4.87% across TRREB and 8.45% in Toronto from March 2023 (see table below).

Sales Year-over-year (All Property Types, March 2024 vs 2023)

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post April 2024: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% in March. Their next upcoming meeting is on  April 10th, 2024.
• Inflation Watch: February’s inflation numbers are due on March 19th. Inflation decreased to 2.9% in January from 3.4% in December. This put inflation inside the Bank of Canada’s target range (1-3%) for the first time since June 2023.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.09% (source: ratehub.ca) which continues the downward trend on fixed rates. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

Is it spring? Is it winter? I really want to lock my winter gear away, but its 15 degrees one day and snowing the next. But hey…at least the clocks switched back and the days are getting longer!

And just like we’re getting a little more sunlight every day until late June, I expect home prices to keep increasing throughout the spring too (nailed that segue).

Aimee’s Take

Last month I mentioned that the January TRREB data showed a decrease in average sale price from December 2023. It was the largest average sale price decrease by percentage from December to January since 2002. It also gave us a new market “bottom” since prices peaked in 2022.

The previous bottom was January 2023 at $1,038,668. January 2024 was $1,026,703.

I explained my perspective on these numbers in last month’s post, so give it a read if you’re interested. Coles notes–a larger proportion of Condo vs Detached and Semi-Detached homes were selling in January vs December, which I believe is what was showing up in the stats.

I finished off that article explaining that we have never had a price decline from January to February, so I expected a decent jump in prices.

Well, the data showed an 8% increase across all TRREB regions (from $1,026,702 to $1,108,719) and an 11.7% increase in Toronto (from $959,915 to $1,072,528).

The interesting thing is that the sold-to-new listing ratio and sold-to-active listing ratio, which measure demand, didn’t really change much from January.

That aligns with my first-hand experience on the ground. I felt strong buyer sentiment in both January and February. Both on the listing side, and competing on properties on offer nights.

So I took a look at the same data as last month in terms of the proportions of the types of properties selling in February vs January 2024.

You can see in the table below that in January, detached & semi-detached homes made up about 30% of sales, and condos made up 60%. Contrasted with February where semi-detached & detached sales made up 38%, and condos made up 51%.

I think this big swing in the proportion of detached & semi-detached homes sold in February vs January accounts for some portion of this increase in average sale price. Those property types sell for higher premiums so they weigh the average higher. 

That being said, the two tables below show the price changes from January to February broken down by property type. The 1st table shows Toronto, and the 2nd shows all TRREB regions combined.

So when we compare apples-to-apples we see that there were some decent price increases from January to February, but semi-detached and detached homes saw most of the gains. I think this shows that this was real appreciation in the market.

I expect this momentum to keep going as the spring market moves forward.  The Bank of Canada said much the same, Tiff Macklem saying last week his projections show the market is already picking up speed. 

Alright, with all that said, here are the rest of the TRREB stats in case you’re interested.

February 2024 TRREB Stats

Average Sale Price

Compared to January 2024, average sale prices increased 8% across TRREB, and 11.7% in Toronto (see table below).

Average Sale Prices Month-over-month (All Property Types, February 2024 vs January 2024)

February sales prices stayed fairly flat year-over-year. With a modest 1.2% increase across all TRREB regions, and 0.1% in Toronto (see table below).

Average Sale Prices Year-over-year (All Property Types, February 2024 vs 2023)

New Listings

New listings increased month-over-month by ~37% across all of TRREB and ~26% in Toronto vs January (see table below).

New Listings Month-over-month (All Property Types, February 2024 vs January 2024)

We also saw a year-over-year increase of ~36% across all of TRREB and ~31% in Toronto (see table below).

New Listings Year-over-year (All Property Types, February 2024 vs 2023)

While it may seem like an increase in supply would ease prices, sales kept pace (as I mentioned earlier, the sales-to-new listing ratio was basically unchanged from last month). These new listings are getting scooped up.

Sales

Month-over-month sales increased 33% across TRREB and ~34% in Toronto vs January (see table below).

Sales Month-over-month (All Property Types, February 2024 vs January 2023)

Year-over-year sales increased 17% across TRREB and ~13% in Toronto from February 2023 (see table below).

Sales Year-over-year (All Property Types, February 2024 vs 2023)

Final Thoughts

The highest average sale price we hit in 2023 was $1,196,000 across all TRREB regions and $1,197,000 in Toronto. Both happened in May. My gut is telling me based on my boots-on-the-ground experiences so far this year we will see or exceed those numbers this spring.

A combination of rate cuts on the horizon and the shock of 5-6% interest rates wearing off and starting to feel “normal” is bringing many buyers off the sidelines.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post March 2024: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% in January. Their next upcoming meeting is on March 6th, 2024.
• Inflation Watch: January’s inflation numbers are due on February 20th. December saw CPI Inflation increase to 3.4% from 3.1% in November. It’s an essential metric, as it can influence future decisions on interest rates.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.14% (source: ratehub.ca) which continues the downward trend on fixed rates. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

Much like the stock market, the January real estate market activity is a good indicator of the direction we can expect for the rest of the calendar year. That being said, we are still in an inflationary environment with higher borrowing costs than we are used to over the last decade, so we have to tread lightly making any sort of predictions about what may or may not happen.

I’ve talked a lot about absorption rate over the last few market updates, and I want to continue with that trend this month as it is a decent barometer for whether we are in a buyer’s or seller’s market.

As of November, we saw a 40.2% absorption rate, which indicates a buyer’s market. This came off the all-time low absorption rates we saw in September (28.6%) and October 2023 (32.3%). I am going to leave out December because the lack of listings that time of year always pushes it artificially high (it was 88.6% for the record).

Overall, we have been gradually trending towards higher buyer demand since the start of the 2023 fall market. That trend continued in January when the absorption rate was 50.8%. For context, once we hit around 60%, we would consider it a seller’s market. From the offer nights I’ve seen in the second half of January, I would argue we are well on our way back to a seller’s market (more on that in a bit).

Another market indicator I like to look at is the sold-to-active listing ratio. The sold-to-active listing ratio is a measure of how fast inventory is moving. The active listings number is the total number of properties available on MLS on the last day of the month and is compared with how many listings we sold in that month.

At the end of November, there were 7,266 active listings in Toronto with merely 1,680 transactions in the entire month. This equals a 23% sold-to-active listing ratio (very sluggish).

At the end of January, there were 4,723 active listings in Toronto and 1,470 transactions. This equals a 31.1%  sold-to-active listing ratio. While still slower, it is trending in the same direction as the absorption rate.

Data aside, I am seeing a noticeable increase in buyer activity and competition on the ground, especially to start February.

What’s Been Happening on Offer Nights

I’ve been continuing to track offer nights, though I’ve scaled back a bit. The sample size isn’t large enough this spring to compare to the fall market, so I’ll speak from my experience, and from those I have been tracking for active clients.

We’re starting to see a shift back to competitive offer nights. One property in Mississauga got 85 offers! That is not a typo. 85. Even compared to the peak of the market, I probably only ever saw 50 at the most, and even that was uncommon!

It was definitely an outlier as it was priced well under market value, and was a semi in the sub $1 million price point that is highly competitive for first-time buyers, but still, that is an absurd amount of offers.

That offer night aside, I have seen several offer nights fetch 10, 15, or 20+ offers. For context, the most offers I saw on a property out of the 1,059 I tracked in the fall was 14, and only 12 fetched 10+ offers. I’ve already seen over 12 properties get 10+ offers this spring.

Not only that, all but one of these properties fetched $200,000 over ask. The lowest was $150,000 and the highest was $450,000. The average was about $300,000 over ask.

All this to say I am seeing buyer demand pick up to start this spring market, and I expect to see that continue as fixed mortgage rates continue to fall. The only thing I could see pulling back demand is if the Bank of Canada pivoted and raised rates instead of cutting them at some point this year, and/or the market is flooded with new inventory.

The first two months of January were extremely quiet, which is typical.  They are usually reserved for relists from the fall of 2023 – ideally February will share a more complete picture of how the Spring Market is fairing.

January 2024 TRREB Stats

Average Sale Price (Month-over-month)

Compared to December 2023, average sale price fell 5.35% across TRREB, and 9.7% in Toronto (see table below).

Average Sale Prices Month-over-month (All Property Types, January 2024 vs December 2023)

I’m not going to lie. I was pretty surprised by these drops in sale prices. Market activity and buyer sentiment picked up in the latter half of January. I believe the proportions of detached & semi-detached vs condo sales in December and January is the reason the stats are showing such a big “drop”.

You can see in the table below that in December 2023, detached & semi-detached homes made up about 40% of sales and condos made up 50%, whereas in January semi-detached & detached sales made up only 30% of sales and condos made up 60%.

Since the average sale price of a Condo is so much lower, that artificially drags down the average sale price. In the last 20 years, January to February has never seen a decline in sale price and averages about a 6% increase, so I think we see a jump in next month’s data.

Average Sale Price (Year-over-year)

January 2023 was the lowest average sale price we’ve seen across both TRREB and Toronto since the market peaked in February/March 2022. It also marks the first time Toronto’s average sale price dipped below $1,000,000 since January 2023 (see table below).

Average Sale Prices Year-over-year (All Property Types, January 2024 vs 2023)

I think the discrepancy in sold property types is still part of the equation here, but I’ll know better when I can compare February’s data. I expect to be back above the $1,000,000 mark when we see February’s data.

New Listings

New listings fell ~34% across all of TRREB and ~41% in Toronto vs January 2023. This means much tighter conditions for buyers as there were over 4,000 fewer properties on the market this January. This could be one of the factors playing into busier offer nights.

New Listings Year-over-year (All Property Types, January 2024 vs 2023)

Sales

Sales fell 20% across TRREB and ~31% in Toronto. This is not surprising considering there were a lot fewer properties on the market than last January. I would defer to what I talked about earlier in terms of absorption rate and the sold-to-active listing ratio. More of what is being listed is being scooped up to start 2024.

Sales Year-over-year (All Property Types, January 2024 vs 2023)

Final Thoughts

Over the last 5 years (outside of 2020 at the start of the pandemic) we’ve had strong spring markets. Without fail, the average sale price has surpassed the peak of the previous fall market (which was around $1,130,000 in fall 2023). If we continue to follow that trend, that would be a minimum of a 10% increase from where we currently sit. I’m not saying that will happen, but I wouldn’t be at all surprised based on the buyer demand and market sentiment I’m seeing out there.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post February 2024: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% in December (the last meeting of the year). Their next upcoming meeting is on January 24, 2024.
• Inflation Watch: November’s inflation numbers are due on December 19th. October saw CPI Inflation decrease to 3.1% from 3.8% in September. It’s an essential metric, as it can influence future decisions on interest rates.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the best 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.53% (source: ratehub.ca) which is a slight decrease from last month. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

With the holidays fast approaching, the Toronto real estate market is headed into its seasonal hibernation until the spring market starts in Jan/Feb. While it is typical for activity to grind to a halt this time of year, this has still been one of the quietest November/December stretches I can remember.

The November TRREB numbers came out last week, and showed the absorption rate creeping back up off of the all-time lows we saw in October and September. As a recap, the absorption rate is the ratio of sales to new listings in a given month.

November saw a 40.2% absorption rate, which indicates we are still in a buyer’s market. It’s well above the low we saw in September (28.6%) though it is still the lowest absorption rate in any November since 2008.

Another market indicator I like to look at is the sold-to-active listing ratio. If you’re one of my active buyers right now, you’ve probably heard me talk about this at length. The sold-to-active listing ratio is a measure of how fast inventory is moving. The active listings number is the total number of properties available on MLS on the last day of the month and is compared with how many listings we sold in that month.

At the end of November, there were 7,266 active listings with merely 1,680 transactions in the entire month. This equals a 23% sold-to-active listing ratio (very sluggish).

Just for context, at the height of the market in February/March of 2022, the sold-to-active listing ratio was 116%. Think about that number for a second, it’s pretty crazy! Simply put, everything was selling as soon as it hit the market. 

This fall, the sold-to-active listing ratio has been at 23% in September, October and November. If we ignore the peak and rewind to November 2019, before COVID, before near-zero interest rates, before the rate hikes, the sold-to-active listing ratio was 71%. If we consider 71% a normal Toronto market, 23% speaks more to what I’ve felt on the ground this fall—sluggish.

What’s Been Happening on Offer Nights

I tracked fewer offer nights in November (168), but enough to see that the trends I found in September/October continued. In total this fall I’ve tracked 1059 offer nights, and here is a recap of the results.

The Condo sector has seen the softest market conditions by far this fall. On average 85% of Condo listings I tracked did not sell on offer night, and over 70% did not receive a single offer.

Holding offer nights continues to be a strategy I would advise against outside of specific circumstances where the combination of property type, location and price point are still in high demand.

If you want to discuss my findings in more detail feel free to reach out! Now let’s dive into the November TRREB Stats.

November TRREB Stats

Average Sale Price (Month-over-month)

Compared to October 2023, average sale price fell 3.9% across TRREB, and 6.8% in Toronto (see table below).

Average Sale Prices Month-over-month (All Property Types, November 2023 vs October 2023)

It is typical for average sale price to drop this time of year as the market slows down, and buyers tend to be in less competition. That being said, these drops are more significant than is typical from October to November.

I believe the types of properties selling in November 2023 vs October 2023 are having an impact on this reported number. There were about 300 fewer Freehold sales (detached, semi-detached, townhouse) in November vs October, and only 40 fewer Condo sales. So Condos are making up a much larger proportion, of sales in November than in October which have much lower average price points.

With this November being one of the lowest November’s for sales on record, this proportional difference can have an outsized effect on the average sale price.

Average Sale Price (Year-over-year)

We end November almost exactly where we were in November 2022 (see table below).

Average Sale Price Year-over-year (All Property Types, November 2023 vs 2022)

It has been a roller coaster of a year for sale prices. With average sale price peaking at $1,196,101 in the spring market (May), before falling back to $1,082,496 in August climbing again to a peak of $1,125,928 in the fall market (October), before coming back to August levels this November.

The market has shown resiliency despite 10 interest rate increases since the spring market in 2022 and tough inflationary conditions. To date, average sales prices are down about 20% from all-time highs in February/March 2022, but the average sale price is still 20-30% above where we were before anyone had heard of COVID at the end of 2019/start of 2020.

New Listings (Month-over-month)

From October to November, new listings fell ~26% across all of TRREB as well as Toronto. This is much higher than the ~14% decline we’ve seen the last two years, but there was also a lot more people who decided to list in September/October this year. This fall market started early and ended early.

New Listings Month-over-month (All Property Types, November 2023 vs October 2023)

Sales (Month-over-month)

From October to November, sales fell ~9% across TRREB and ~12.5% in Toronto. These are actually in the normal range, but sales this fall were anything but normal.

Sales Month-over-month (All Property Types, November 2023 vs October 2023)

To recap, sales in August, September, and October 2023 were the lowest in their respective months in the last 20 years. November 2023 was the 2nd lowest November (the lowest being in 2008). Demand has been at all-time lows this fall, but supply has stayed low as well.

There has definitely been more inventory this fall than previous months in 2023, but is still well below where it was before interest rates began to rise.

Final Thoughts

This will be my last update for 2023, and December’s data won’t tell us much about what to expect in the spring market. It’s going to be all about the market activity in the second half of January and early February. We’ve had strong spring markets for the last 5 years (outside of 2020 at the start of the pandemic) where the average sale price has surpassed the peak of the previous fall, but that doesn’t mean it’s a guarantee.

After 3 straight rate holds by the Bank of Canada, and easing inflationary pressures, there have been some whispers about rate cuts in 2024. If this happens to coincide with any part of the spring market, we could see a flurry of activity.

If you’re looking to get an indication of where the market may be headed in the spring, I’d recommend getting in touch a few weeks into the new year after I’ve had a chance to monitor some of the activity.

Happy new year, and see you in 2024!

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post December 2023: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% in October. We’ll see what they decide next at their upcoming meeting on December 6th.
• Inflation Watch: October’s inflation numbers are due on November 21st. September saw CPI Inflation decrease to 3.8% from 4.0% in August. It’s an essential metric, as it can influence future decisions on interest rates.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the average 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.84% (source: ratehub.ca) which is a slight increase from last month. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

The October TRREB numbers came out last week, and the absorption rate was historically low again. As a recap, the absorption rate is the ratio of sales to new listings in a given month. This October it was about 32.3% (4,646 sales to 14,397 new listings) up 3.7 basis points from 28.6% in September.

Last month I mentioned that September had the lowest absorption rate of any September in the last 20 years, and while it did increase slighlty in October, it is still the lowest absorption rate in October in the last 20 years.

Anything below 50% would be considered a buyer’s market, so 32.3% definitely puts us in that category. Such an imbalance between supply and demand would make you think that the average sale price would have gone down in October. I was surprised to find out that prices increased slightly by 0.6% month-over-month and 3.35% year-over-year.

It’s perplexing that the average sale price increased because the market conditions that I’m experiencing and tracking are not showing signs that buyers are willing to pay more for properties today than they were in August or September. So I’m taking that stat with a grain of salt.

Whats Been Happening on Offer Nights

I tracked 491 Offer nights in October, and I’ve tracked 928 since the start of the fall market (Novembers are not included here as it’s a small sample size at this point)

74% of properties not selling on offer night is a pretty telling number in terms of buyer demand (based on Toronto’s recent history around bidding wars). 3 out of 4 properties are getting no offers. This is one of the reasons I was taken aback by the average sale price increase.

I’m still surprised how many sellers and their agents are opting to have offer nights. Especially on the Condo side where nearly 90% did not sell. From what I’ve been watching, unless you have a very special property, you’re better off letting buyers make offers at their convenience.

If you want to discuss my findings in more detail feel free to reach out! Now let’s dive into the October TRREB Stats.

October TRREB Stats

Average Sale Price (Month-over-month)

As mentioned above, the average sale price rose 0.6% month-over-month across all TRREB regions, and 0.76% in Toronto.

Average Sale Prices Month-over-month (All Property Types, October 2023 vs September 2023)

New Listings (Month-over-month)

New listings fell 11.35% across all TRREB regions, and 13% in Toronto. I don’t think this is a big enough decrease in supply to explain how the average sale price stayed consistent over last month since the absorption rate was still so low.

New Listings Month-over-month (All Property Types, October 2023 vs September 2023)

Sales (Month-over-month)

Month-over-month sales across all TRREB regions were almost identical with only 4 more sales in October than we had in September. There was also a 5.28% increase in sales in Toronto, which was mainly concentrated in the detached and semi-detached markets.

Sales Month-over-month (All Property Types, October 2023 vs September 2023)

4,646 sales is the lowest in the month of October dating back to 2002 and the second straight month below 5,000 sales. It’s the only 2nd October in the last 20 years where sales have fallen below 5,000 for the month, the first time being last year in October 2022.

Average Sale Price (year-over-year)

Average sale prices rose ~3.4% across all TRREB regions from and ~3.2% in Toronto since October 2022. Most of this appreciation was in the detached and semi-detached market. The average sale price in the Condo market declined 1.1% across all TRREB regions and 1.51% in Toronto.

Average Sale Price Year-over-year (All Property Types, October 2023 vs 2022)

Sales (year-over-year)

Looking at sales we can see that there was a decline of almost 6.35% across all TRREB regions and 3.06% in Toronto.

Sales Year-over-year (All Property Types, October 2023 vs 2022)

The decrease in sales is made more significant when we see the supply increase year-over-year.

New Listings (year-over-year)

New Listings are up 38.6% across all TRREB regions, and 38.2% in Toronto. That’s over 4,000 more listings on the market this October compared to last.

New Listings Year-over-year (All Property Types, October 2023 vs 2022)

Final Thoughts

In last months report I said if I were a betting woman, I’d put my money on home prices flatlining or declining the rest of the fall market. While a 0.6% increase could be considered flatlining, I technically would’ve lost that bet 🙂

That being said, supply is heavily outweighing demand right now, illustrated in both the absorption rate, and what I’ve tracked on offer nights. Coupled with the fact that prices cyclically drop in November, I’d double down on last months bet.

Since the Bank of Canada doesn’t have another rate decision until December 6th, I don’t really see many reasons November will be any different than what we’ve seen thus far in the fall market, and would also expect to see December be much quieter than previous years. Expect more of the same to wrap up 2023.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post November 2023: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5% in September. We’ll see what they decide next at their upcoming meeting on October 25th.
• Inflation Watch: I’ve got my eye on the inflation data. September’s CPI report is due on October 17th. August saw CPI Inflation go up to 4.0% from 3.3% in July. It’s an essential metric, as it can influence future decisions on interest rates.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the average 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.69% (source: ratehub.ca) which is unchanged from last month. If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

The September TRREB numbers came out last week, and wow is the absorption rate low. What is the absorption rate? It’s the ratio of sales to new listings in a given month. This September it was about 29% (4,642 sales to 16,258 new listings). Written in plain English, that would be about 1 sale for every 3 homes listed in September.

It’s the lowest I’ve seen in years and the lowest in 20 years. In fact, it has never been below 38% in September since TRREB started to track this data in 2002.

Most institutions will tell you 40-60% would be considered a balanced market, but I would say as you approach 60%, you’re moving into more of a seller’s market, and we’ve been above 60% fairly consistently for the last number of years (upwards of 80% at the peak of the market in 2021). At 29% we are almost certainly in the midst of a Buyer’s Market.

Aimee’s Experience

Funny enough, I already knew we were going to see an absorption rate in the 20-30% range because I am a psychic… 😉

Jokes aside, if you’ve worked with me during the past few years, or read any of my market updates, you probably already know I obsessively track offer nights. I do it because I can’t rely on month-old TRREB data to guide my clients on what’s going on in the current market. I want to see up-to-the-minute data to combine with my experiences in the trenches.

Since the start of the summer I could tell September 2023 was going to be a pivotal month for the direction of the market, so I tracked every offer night I could. 556 to be exact!

How I do it is my little secret, but believe me, it’s a lot of manual work! Here are some key insights I found:

September (400 Offer Nights)

• 64.5% (258) did not sell on offer night
  • Of the 258, only 14% (36) eventually sold with a different pricing/offer strategy
• 50% (199) of the offer nights received 0 offers
• Condos
  • 120 offer nights tracked
  • 77.5% (93) did not sell
  • 66% (72) received 0 offers
• Detached
  • 138 offer nights tracked
  • 66% (91) did not sell
  • 50% (69) received 0 offers
• Semi-Detached/Townhouses
  • 142 offer nights tracked
  • 52% (74) did not sell
  • 41% (58) received 0 offers

October (156 Offer Nights…so far)

This is a smaller sample size, so some of these numbers may change by the end of the month. That being said, Detached and Semi-detached percentages thus far are very close to September, while Condo demand seems to be softer than in September based on the offer nights I I’ve tracked so far in October.

• 69% (108) did not sell on offer night
• 61% (95) of the offer nights received 0 offers
• Condos
  • 59 offer nights tracked
  • 85% (50) did not sell
  • 75% (44) received 0 offers
• Detached
  • 47 offer nights tracked
  • 66% (31) did not sell
  • 60% (28) received 0 offers
• Semi-Detached/Townhouses
  • 50 offer nights tracked
  • 54% (27) did not sell
  • 46% (23) received 0 offers

Having this information before anyone else has been a secret weapon in negotiations for my clients (both buyers and sellers) so far this fall. A lot of listing agents I’ve worked with recently were acting under the assumption that this fall market was/would be similar to the hot spring market, (some even referencing sales from the height of the market in February 2022!) and were adopting pricing/offer strategies accordingly.

The absorption rate reported by TRREB only confirmed what I’ve been telling my clients and these other agents for weeks. Buyer demand has dropped significantly. Buyers are still active, however, they have both more choice and in many situations more time to make a decision.

The most recent TRREB data will be an eye-opener for many. I would expect to see a shift in listing strategies away from offer nights for the remainder of the year (unless it’s an exceptional 10/10 property). There are naturally some properties that are still fairing very well on their offer nights, but it’s very critical to be mindful of what the best listing strategy is for each individual property.

If you want to discuss my findings in more detail feel free to reach out! Now let’s dive into the September TRREB Stats, to see how things have played out so far this fall.

September TRREB Stats

Average Sale Price (Month-over-month)

The average sale price rose 3.4% month-over-month. I wasn’t expecting as large an increase based on everything I just discussed. I believe that the types of properties being sold was the largest contributor to this increase. Condos made up a larger portion of sales in August than in September, meaning other more expensive property types like Detached and Semi-detached made up a smaller portion of sales in August.

In August, Detached, Semi-detached, and Townhouse properties made up 60.56% of sales, whereas that number increased to 63.96% in September. A difference of…

…wait for it… 3.4%.

I would argue that prices were actually flatter than these numbers suggest.

Average Sale Prices Month-over-month (All Property Types, September 2023 vs August 2023)

I had similar findings in Toronto. Average sale price increased 11.3% from August. Detached, Semi-detached, and Townhouse properties made up 34.06% of sales in August, whereas September those property types made up 44.55%. That’s a 10.5% difference which is very close to the average price increase of 11.3%.

New Listings (Month-over-month)

Supply is way up, with new listings up 32% across TRREB and up 50% in Toronto. We haven’t seen this many listings hit the market in September since before the pandemic (2017, 2018 ,2019)

New Listings Month-over-month (All Property Types, September 2023 vs August 2023)

Sales (Month-over-month)

Sales were down about 12% across TRREB, which I initially thought was very abnormal from August to September, but I was wrong. 9 out of the last 21 years sales have decreased from August to September.

Sales Month-over-month (All Property Types, September 2023 vs August 2023)

4,642 sales is the lowest in the month of September dating back to 2002. In fact, it’s the only September in the last 21 years to have less than 5,000 sales (the previous low was 5,038 in September 2022).

Suffice it to say, that buyer demand was very subdued in September 2023 which seems to be continuing in October based on what I’m seeing on the ground.

Average Sale Price (year-over-year)

Average sale prices rose 3% from September 2022, and are sitting just below where they were in September 2021.

Average Sale Price Year-over-year (All Property Types, September 2023 vs 2022)

Sales (year-over-year)

Looking at sales we can see that there was a decline of almost 8% which again points to lower buyer demand.

Sales Year-over-year (All Property Types, September 2023 vs 2022)

The decrease in sales is made more significant when we see the supply increase year-over-year.

New Listings (year-over-year)

New Listings are up 44.7% and Active Listings (all listings currently on the market) were up 39.7% from last year. That’s over 5,000 more listings on the market this September compared to last.

New Listings Year-over-year (All Property Types, September 2023 vs 2022)

Absorption Rate (year-over-year)

Considering that there were over 5,000 more listings on the market in September 2023 from the previous year, it’s not surprising to see that the absorption rate fell 16 basis points.

A 44.8% absorption rate last September indicated a balanced market, a 28.6% rate this September almost certainly puts us in a Buyer’s Market.

Absorption Rate Year-over-year (All Property Types, September 2023 vs 2022)

Final Thoughts

Based on all of the above data, the offer nights I’ve tracked thus far in October, and my experiences on the ground to date, it’s clear that supply is well outweighing buyer demand right now. If I were a betting woman, I’d put my money on home prices flatlining or declining the rest of this fall market.

The only thing that would flip that narrative is if the Bank of Canada did a surprise rate cut at the end of the month, hinted at cuts early next year (both unlikely), or inventory completely drying up.

I think armed with this latest TRREB data, you will see buyers be a little more aggressive pushing back against sellers’ expectations. This is clearly not the best time to “offload” properties, but it is an advantageous time to purchase and or “move up”. There is more choice and more time to make decisions than we’ve had in a long time.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

The post October 2023: Toronto Real Estate Market Update appeared first on Aimee Fairweather & Co Real Estate.

Now, when it comes to real estate, September signals the start of the fall market. But in reality, things don’t really kick off until the week after Labour Day. Between back-to-school chaos and everyone settling into their work routines, the true market hustle kicks off this week (September 11th).

That being said, one thing that did catch my eye in the first week of September was the number of Condo listings. It’s way more than I remember from past years. And a good portion of Condos are tenant-occupied (35%). Comparing June-August 2023 to 2022, there was an approximate 50% increase in tenant-occupied Condos listed.

If I were to hazard a guess, landlords are starting to feel the financial pinch of high-interest rates coupled with rent control preventing them from passing on any cost to tenants. Particularly those on variable rate mortgages, or those who are refinancing from 2017-2018.

In terms of August TRREB Stats, I’ve always mentioned I don’t usually put too much stock in summer numbers. Everything – from sales to prices to new listings – tends to dip. It’s cyclical. Regardless, I’m here to break it all down and offer some insights below.

Key Developments

• Interest Rate Steady: The Bank of Canada decided to keep its policy interest rate unchanged at 5%. We’ll see what they decide next at their upcoming meeting on October 25th.
• Inflation Watch: I’ve got my eye on the inflation data, which is due on September 19th. In July, the CPI Inflation was at 3.3%. It’s an essential metric, as it can influence future decisions on interest rates.
• Mortgage Rates Check: For those in the house-hunting phase or considering a refinance, the average 5-year fixed mortgage rate from the Big 6 Banks is currently sitting at 5.69% (source: ratehub.ca). If you’re in need of a mortgage professional, get in touch and I’m happy to recommend someone I know, like, and trust.

August TRREB Stats

Month-over-month

The average sale price fell 3.2% month-over-month. That is a pretty significant decline historically, as we typically see a 1-2% decline. It’s a bit of a head-scratcher as to why it decreased so much.

Average Sale Prices Month-over-month (All Property Types, August 2023 vs July 2023)

Toronto faired the worst in the GTA with a 5.65% decline, driven by the East End.

Was it an increase in supply (new listings)? Nope, new listings were down 10.3%.

New Listings Month-over-month (All Property Types, August 2023 vs July 2023)

So then it must be a decrease in demand (sales)?

Well, that doesn’t seem to be the case either. If we look at month-over-month sales, you can see that sales actually slightly increased by 0.8% from July to August.

Sales Month-over-month (All Property Types, August 2023 vs July 2023)

Thinking logically, with less supply, and similar or slightly increased demand compared to July, you would think prices would stay either flat or potentially increase.

I’m not going to lie, this is a little perplexing. It’s definitely an outlier. What does it mean? Difficult to tell at this point. Most of the decrease seems to be in the Condo and Semi-detached market as Detached home prices stayed flat from July to August.

Let’s look at the year-over-year data to see if we can find any explanations.

Year-over-year

Average sale prices stayed fairly flat from last August.

Average Sale Price Year-over-year (All Property Types, August 2023 vs August 2022)

Toronto saw a 2.5% decline, year-over-year, which seems to be mostly driven by the Condo and Detached market in Central Toronto as you can see in the tables below.

Condo Average Sale Price (Year-over-year, August 2023 vs August 2022)

Detached Average Sale Price (Year-over-year, August 2023 vs August 2022)

In comparison, Semi-detached homes in Central Toronto have done quite well, showing that there is still strong demand for single-family starter homes.

Semi-Detached Average Sale Price in Toronto (Year-over-year, August 2023 vs August 2022)

Looking at sales we can see that there was a decline of almost 6% which points to less demand than this time last year.

Sales Year-over-year (All Property Types, August 2023 vs August 2022)

Now if we look at New and Active Listings, we start to see something interesting. New Listings were up 16.7% and Active Listings (listings carrying over from previous months) were up 16.5% from last year.

New Listings Year-over-year (All Property Types, August 2023 vs August 2022)

Active Listings Year-over-year (All Property Types, August 2023 vs August 2022)

So we had a lot more inventory this August than last year, which could explain the larger-than-average decline this August.

Final Thoughts

The GTA real estate market is very nuanced, and one month of data, especially summer data, can be difficult to interpret.

This August could be an outlier, a sign of cooling demand, or a calm before the storm. I don’t try to make predictions about what will happen, I just watch the market closely and look for signs of the direction it’s headed in the current market cycle.

In my opinion the best tools to understand where the market is going in the short term is monitoring the type of listing strategies sellers are choosing, and the amount of competition on offer nights.

As I mentioned earlier in this post, this week (September 11th) is where the market really kicks off. I’ve got my eyes on a number of offer nights to see if I can get an early indicator of where the fall market might be heading.

As always if you have more specific questions, need advice, or want to talk about what I’m seeing out there, get in touch. I’m always happy to talk shop!

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