January Market Update

In January 2024, the average selling price of homes across the GTA experienced a one percent year-over-year decline, settling at $1,026,703 according to The MLS® Home Price Index Composite.

Home sales increased compared to the same month in 2023. This rise was partly due to certain homebuyers taking advantage of lower interest rates linked to fixed-rate mortgages.

New property listings also saw a year-over-year increase, the growth rate was lower than that of home sales resulting in tighter market conditions, compared to the previous year, suggesting the possibility of renewed price growth as we transition into the spring market.

The increased demand, coupled with a more modest increase in available homes, may contribute to a potential uptick in housing prices.

Durham & Toronto Market Insights

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January 2024 Market Stats Durham

Reflecting on last month's post

Last month we proposed the ways our housing market could go in 2024 largely hinging on the potential for mortgage rates to come down based on a reduction in the Bank of Canada's (BoC) policy and that of the fixed-rate bond market.

Well if January is any indication a return to a Seller's Market is imminent. With the BoC pausing rates for the 4th consecutive decision in January and fixed rates looking more favorable buyers have gotten a head start on the Spring Market.

What we are seeing on the ground

In a market characterized by both increased sales and a surge in property listings, home buyers and sellers find themselves navigating a dynamic and competitive landscape.

For Buyers

The spike in listings provides buyers with a broader array of options, but the heightened demand, particularly in the lower price range, has resulted in more properties receiving multiple offers. Despite the competitive atmosphere, there remains ample opportunity for savvy buyers to find a suitable property and engage in negotiations.

For Sellers

Sellers, on the other hand, are benefiting from the renewed demand, potentially receiving more attractive offers. Overall, the market's equilibrium between increased sales and listings creates an environment where both buyers and sellers must adapt to changing dynamics while recognizing opportunities for successful transactions.

MORE MARKET INSIGHTS (add stats for Markham/Stouffville & Port Hope/Cobourg)

January 2024 Market Stats Markham Stouffeville

What’s next: A Reflection on 2023 and a look ahead to 2024

2023 Summary for the GTA

Home sales were down in 2023 buyers who stuck it out through higher interest rates in 2023 benefited from more choice and more negotiating power which resulted in paying lower prices when compared to 2023. 

• Home Sales saw a 12.1 per cent dip compared to 2022.

• Average sold prices across home types in 2023 saw a 5.4 per cent decline compared to 2022 bringing average sold price down to $1,126,604.

Outlook for 2024

There is little consensus on the future of the real estate market in 2024. Aside from the fact that most experts expect some relief in the Bank of Canada’s Policy rate which should help with borrowing costs for homeowners and would-be buyers. Experts are divided on exactly when, how many and how big an impact interest rate cuts will have. 

The main factors affecting real estate forecasts in 2024.

• When and how much will the BoC reduce its policy rate in 2024? (2024 BoC announcement schedule)

• Will changes in variable and fixed rate mortgages be enough to bring buyers back?

• How will homeowners up for renewal deal with rising financing costs?

2 Potential Outcomes and Everything in Between

A Return to a Sellers Market

If interest rates do come down in 2024 we will see more buyers enter the market. The question is, how many rate cuts could we see and how low could rates go? In March of 2023 a mere pause at 4.5% sent us back into a brief Sellers Market. If that happens again buyers who stay on the fence will regret it. It’s unlikely that we see the kind of pandemic sales we saw but it remains possible that the combination of high immigration, rising rent costs and lower interest rates increases competition for homes in 2024.

A Balanced Market

An environment with modestly lower interest rates could yield a continuation of the current balanced market. This is especially true if inventory remains at 3-4 months worth. Sellers looking to downsize, move up or relocate may be more likely to move when interest rates drop and sellers who are renewing mortgages at a cost that may be too high might decide to sell. This would bring more homes on the market and offset any increases in demand. This seems like the safe bet and most likely outcome to us.

For the Doom Scrollers

The other possibility is for those who love bad news. According to RateHub.ca 80% of all mortgages that were outstanding as of March 2022 will come up for renewal in 2024. That means those borrowers will be renewing at a much higher rate. Per Statistics Canada, mortgage interest payments have soared by nearly 90% since March 2022. Some are forecasting a high volume of distressed sales which if enough homes come on the market without buyers continue to put downward pressure on home prices throughout 2024. This inventory of course would have to outpace demand from new buyers entering the market as interest rates come down. Another factor of note is that for 2024 alone this pool only represents 14% of all mortgages in Canada which relative to the total number of homeowners is very small and Canada’s mortgage stress test will have buffered some of the risk for many of these homeowners.

Our Point of View

For our part the most likely scenario is a balanced market where the push/pull effect of higher interest rates pushing some buyers off and some sellers in while immigration and a slow reduction in interest rates bolster demand could offset one another enough to balance the market in 2024. 

That said if interest rates become too attractive and more buyers enter the market we could see competition for homes pick-up in 2024.

What do you think will happen in 2024?

December Market Update

The average home price was $1,084,692 in December up 3.2% year-over-year across the GTA in December and flat month-over-month.

Active listings were up compared to 2022 yet down 38.12% vs. November this year. However, a reduction in listings in December is normal through the holiday season. 

Days on Market increased as well both year-over-year and month-over-month.

With 3 months of inventory, the GTA Housing Market was balanced in December 2023.

Durham & Toronto Market Insights

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December 2023 Market Stats Durham

December 2023 Market Stats Toronto

What we are seeing on the ground. 

For Buyers

When a market is more balanced and not favouring one side or the other negotiations become more important for buyers and sellers. We continue to see offers accepted with conditions included. It’s become the norm for offers to include Home Inspection and Financing clauses. Beyond understanding the market value for homes and what to offer, Buyers need to go in with the right clauses to give them peace of mind. Sellers need to evaluate offers on more than just price and ensure their agent is qualifying buyers as best as possible when considering an offer.

For Sellers

Many sellers terminated their listings in December as the buyer pool shrunk with the holiday season and our expectation is many will relist in the new year. We have noticed several listings have gone through price changes or were terminated and relisted with new pricing in the last quarter of 2023. For sellers, this is where it is key to know the value of your home, how much you need to get to make the move you want, and what pricing strategy will be most effective in your local market.

MORE MARKET INSIGHTS (add stats for Markham/Stouffville & Port Hope/Cobourg)

GTA Real Estate Update: November 2023 Market Update

The market continued to favour buyers in November despite a slight dip in months of inventory relative to October. Prices were up 0.3% year-over-year but down 3.89% month-over-month. The current average price of a home in the GTA sits at $1,082,179.

We had 16.5% more new listings relative to November ‘22 although not surprisingly fewer homes (10,545) came on the market in last month relative to October (14,397) as buyers and sellers turned their attention to the holiday season. As a result sales were down 8.82% month over month. Sales were down 6% from November ‘22.

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What does this mean for buyers and sellers?

Buyers

Buyers remain in a strong negotiating position with inventory to choose from and the ability to negotiate favourable terms when presenting offers. Now remains to be a good time to buy. Pricing has been trending downward and with indications pointing to interest rates coming down as early as Q2 2024 buyers who purchase now will be ahead of the curve when those on the sidelines re-enter the market.

Sellers

Fewer properties came online in November meaning sellers today have slightly less competition then they did through October albeit more than a year ago. It continues to be important to price properties effectively to attract buyers who can offer the best possible price and terms. Preparing a home and presenting it to best showcase its strengths is key.

New Legislation

Another big change impacting Real Estate is the release of new regulations governing Realtors®. TRESA or the Trust in Real Estate Services Act replaced previous regulations on December 1, 2023. Among several changes will be a new Open Offer Process available to sellers when listing their property. Read more about this process and it’s impact on buyers and sellers here [insert link to other blog post].

Planning a Move

Whether you are considering upgrading, downsizing or relocating now may be a better time then you think. Purchasing a home in the next 60-90 days may be your ideal time to get a home at the best possible price. Even though mortgage rates are high, making a purchase before they go down and more buyers step back into the market can put you at an advantage. Just be sure to explore your options with qualified professionals including well informed Realtors® like ourselves, lenders, etc. 

Interest Rates and Their Impact:

On December 6th the Bank of Canada held its policy rate for a third straight time indicating we may be at the end of a cycle of increasing rates. Recently, bond yields, which underpin fixed rate mortgages have been trending lower which has provided some short term relief for those looking at fixed rate mortgages. 

A look ahead

As more and more financial experts begin forecasting a move by the Bank of Canada to lower its policy rate in 2024 in response to the changing economy and a growing number of upcoming mortgage renewals, the outlook is better for existing homeowners and those looking to get into the market.

MORE MARKET INSIGHTS

While the stats show GTA home prices have increased in the month of October 2023 compared to the same time last year, prices remained relatively flat from the previous month. The big change we are seeing is the inventory levels are way up and the sales volume is down.

Durham & Toronto Market Insights

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What it means for Buyers & Sellers

This presents an opportunity for buyers. You can likely avoid competing on a property and negotiate on price and terms, which hasn't always been an option for successful buyers in recent years. If you own your current home and are looking to move, it may be wise to sell first. This ensures you don't overextend on your purchase and can upgrade/downsize with confidence.

Sellers Need to Match the Market

Homes are taking longer to sell and we are seeing a lot of terminated listings and price adjustments. The properties that are selling are the ones priced correctly to today's market conditions. If you want to get your property sold then the correct pricing and presentation are extremely important.

Impact on New Home & Pre-Construction Sales

Another segment of the market that is feeling the impact of high-interest rates is new home and pre-construction sales. We are noticing that there is a growing number of assignment sales being offered at a discount from the original purchase price. If you are considering purchasing an assignment it is imperative that you have representation and have the contract reviewed thoroughly. 

What's Next

What's next for the real estate market in the GTA, well nobody knows for sure. With so many mortgages set to renew in the next few years, we will certainly be watching and waiting to see what happens with interest rates moving forward.

MORE MARKET INSIGHTS

October 2023 Market Stats Markham Stouffville

October 2023 Market Stats Northumberland

Staying Cool:

The GTA real estate market maintained its cool demeanor in September, following the trends set during the summer months. The impact of interest rates continued to affect buyers.

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Home Sales:

In September, 4,642 homes were sold in the GTA, marking a 12.1% drop from August and a 7.1% decline from the previous year. Detached homes and condo apartments continued to be the top choices for buyers. The dip in sales was more noticeable for ground-oriented homes, particularly semi-detached houses and townhouses.

Home Prices:

The average selling price for homes in the GTA was around $1,129,428. This is a 3% increase compared to the previous year and a 3.4% uptick from August. However, it's important to note that this doesn't necessarily indicate a reversal of the downward trend seen over the summer, given the rising inventory and declining sales.

Inventory Levels: 

The GTA's current month of inventory stands at 3.94 months, signaling a balanced market. New listings increased by 44% compared to the previous year and by 32% from August. Interestingly, this contrasts with the pricing trends. More homes are available, but fewer are selling, despite slightly higher prices month-over-month. In the Durham Region, the market remains more competitive, with only 2.6 months of inventory.

Days on Market:

Homes are spending an average of 20 days on the market. In Durham Region, it took approximately 25 days for homes to sell, and in Toronto, that number was around 30 days. It's worth mentioning that we're noticing many listings terminating and relisting, which can extend these timeframes.

Interest Rates and Their Impact:

Bank of Canada Governor Tiff Macklem noted, "The fight against inflation is not over." Despite taking a "wait and see" approach in September, the impact of the nine consecutive interest rate hikes since April 2022 continues to affect buyer purchasing power. Moreover, the Bank of Canada hasn't ruled out another interest rate hike in October, with the next announcement scheduled for Oct. 25th.

Pricing Strategies:

Pricing plays a significant role in this market, especially in the Durham Region. An overpriced home can struggle to gain interest, while an underpriced one may not attract the right offer. As demand eases due to rising borrowing costs, many sellers are finding it challenging to establish the right pricing strategy. Some homes miss offer dates, terminate listings, and relist, sometimes more than once before they sell. Accurate pricing backed by data is crucial for an efficient sale.

External Factors:

The market is still influenced by the same external factors, primarily interest rates and their impact on buying power, coupled with the heightened demand driven by population growth in the GTA.

Local Market Variations:

Every market experienced significant inventory increases, but some key markets saw substantial price swings. For example, Ajax witnessed a 7.3% increase in the average price of semis, while Clarington saw a 7.5% decrease in detached prices and an 8% increase in condo pricing. These shifts are often due to fewer sales and specific property sales impacting the average price month-over-month.

What's Next:

In the short term, what happens next largely depends on the Bank of Canada's decision in its Oct. 25 announcement. If inventory continues to rise, we can expect the market to remain cool in the latter half of 2023. While mortgage affordability remains a challenge for buyers, they may have more negotiating power. Financing and inspection conditions are becoming more common in offers, and sellers will continue to adapt to a more competitive market. Preparing your home effectively, including setting a well-thought-out list price, will be crucial for attracting the right buyers.

The GTA real estate market keeps evolving, and we'll keep you updated. If you have any questions or need assistance with your real estate endeavors, don't hesitate to reach out. We're here to guide you through the ever-changing world of real estate!

MORE MARKET INSIGHTS

As your trusted real estate expert, I'm here to give you a straightforward rundown of what's been happening in the Greater Toronto Area (GTA) real estate market this past August. Let's dive right in:

Cooling Off, but Steady:

The GTA real estate market continued to cool off in August. A few factors played a role, such as interest rate increases by the Bank of Canada, economic uncertainty, and a shortage of available homes. So, it's been a bit more relaxed for both buyers and sellers lately.

Durham & Toronto Market Insights

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*See insights for Markham/Stouffville & Northumberland at the bottom.

Home Sales:

In August, a total of 5,294 homes were sold across the GTA. This is a bit up from July but down 5.2% compared to last year. The most popular choices among buyers were detached homes and condo apartments.

Home Prices:

The average selling price for a home in the GTA was around $1,082,496. It's up slightly from last year but down 3.2% from July. So, prices have been holding fairly steady, with some fluctuations in condos and semis in the Durham Region.

Inventory Levels:

Right now, we have about 2.2 months of inventory. Technically, this means it's still a seller's market (anything below 3 months). But, due to the impact of interest rates, it's more balanced. We did see more listings this year, but overall, we still don't have enough homes for sale.

Days on Market:

Homes are selling faster than they did last year, but it's taking a bit longer than it did in July. On average, homes in Durham Region took 22 days to sell, and in Toronto, it was around 29 days.

Mortgage Rates and Affordability:

Interest rates have gone up ten times since April 2022. That's affecting how much people can afford to borrow. So, affordability is on the minds of many buyers. High demand and low supply are also keeping prices from dropping considerably.

Investor Trends:

We're noticing that condo investors in Toronto are starting to sell their units because of those rising interest rates. This might make condos a better option for homebuyers.

External Factors:

Interest rates are still a big deal. They affect how much people can spend on a home and how motivated sellers are. Plus, we're seeing a lot of new folks moving to the GTA, which is keeping things competitive despite challenges for buyers.

Local Market Variations:

Certain areas, like Whitby, saw a 25.2% increase in condo prices. But don’t be fooled. This was likely because there were fewer sales, and some specific properties affected the average price. We call those sales outliers.

What's Next:

As we head into September and the Fall Market, we usually see more listings and more buyers. The Bank of Canada decided to keep interest rates at 5% for now, so that gives buyers some short-term certainty. We predict a more balanced market in the near future, with financing costs being a bit high for aggressive bidding wars, but still, strong demand and low inventory will keep prices competitive.

What's the Takeaway

In a nutshell, the GTA real estate market is still active, but it's finding a more balanced groove. If you're buying or selling, make sure to stay updated with these trends, and feel free to reach out if you have any questions or need assistance. We're here to help you navigate the ever-changing real estate landscape!

MORE MARKET INSIGHTS

Canada's economy experienced a modest 0.3% growth in GDP during May. However, it is projected that this growth may slow down in June, with an expected decrease of 0.2%. If this projection holds true, it would result in a 1.2% increase in the economy for Q2 of 2023, which is lower than the previous quarter's 3.4% increase and also falls short of the Bank of Canada's initial estimate of a 1.5% increase for Q2. The slowdown in economic growth has been a focal point for the Bank of Canada, and it may impact their decision on implementing another rate hike in September.

Given the recent economic performance and projections, there could be potential implications for the Fall Real Estate Market. The lower-than-expected GDP growth may affect consumer confidence and spending patterns. However, the overall impact on the real estate market will depend on various factors, including inflation rates and interest rates, which are yet to be announced.

To have a clearer picture of how the Fall Real Estate Market may be affected, it would be prudent to keep an eye on the upcoming updates on inflation (August 10th) and GDP for Canada (September 1st), as well as the rate announcement on September 6th. These key economic indicators will provide valuable insights into the direction of the economy and its potential impact on the real estate sector.

That said, the biggest factor for real estate in recent months has been interest rates. As we have seen throughout 2023 when interest rates stabilize more buyers enter the market and that puts upward pressure on pricing.

Below you can find a schedule of all Bank of Canada interest rate announcements for the remainder of 2023:

• Wednesday, September 6
• Wednesday, October 25* Monetary Policy Report Published
• Wednesday, December 6

Sources: Bank of Canada News / Summary provided by Steven J. King, Principal Broker at Verico SGH Mortgages Inc.