The Greater Toronto Area represents some of the most lucrative real estate in Canada, yet it’s also vulnerable to many economic effects, especially in the wake of the Covid-19 pandemic, and the massive rush of inflation that has followed in its wake. As such, Toronto’s current 2024 housing market seems to be starting off on a sluggish note, though that may turn around within the 2nd quarter, and beyond.
Inflation is perhaps the biggest culprit, particularly because it affects the affordability and ease at which investors can build new condominiums, a hot property item for Toronto families, new expats and immigrants. As such, condo sales have tumbled precipitously, down 44% in November of 2023 in comparison to the same time frame in 2021.
On the residential front, inflation plays a lesser role in comparison to high selling prices, which are warding off potential buyers. The expectation is leaning towards the bursting of a real estate bubble, or some sort of real estate crash, although this scenario remains unlikely within the Greater Toronto Area. In actuality, buyers simply aren’t willing to pay high asking prices during a period when interest rates remain high, and inflation is still a massive concern.
Supply and demand is another factor, with Ontario unable to keep up with its growing population. Plans for new housing units have been in the works for some time, yet struggle to fill growing demand, leading to higher overall prices across the board. Yet, construction of new homes is expected to continue apace due to sheer necessity, which means any likelihood of a real estate construction collapse is improbable. Still, the effects are being felt as buyers play the waiting game for any signs of relief.
Moving forward, Royal LePage estimates that average home prices in the GTA will inch upward to 6% percent by the end of the year, while ReMax believes prices will drop by 3% percent. While both of these numbers may seem insignificant, they do, in actuality, have a marked effect on the final asking price of an average Toronto-area house.
To that end, housing construction will continue, though at a pace slower than originally predicted. Condo investors may begin selling off properties to avoid incurred debt in an era with high interest rates, which means more units could be up for sale, further lessening the demand issue. That still leaves residential homes, however, which is where we could see a tug of war take place between sellers eager to offload their homes for maximum profit, and buyers unwilling to sign on the dotted line.
During this particular tricky period in the GTA’s real estate market, vigilance will be key for buyers looking to make a purchase, and sellers looking for the most optimal outcome. Both will have to take into account the current state of the economy, higher-than-normal inflation, and other factors that are having a direct impact on housing across Ontario. However, the stalemate currently taking place cannot last forever, which means buyers and sellers may see more opportunities open up throughout the year.
In December of 2023, the Bank of Canada announced it would hold its current benchmark interest rate at 5%, before determining when, and how much to lower interest rates throughout 2024. Inflation is still above where it needs to be, which means further rate hikes are not an impossibility, though all indicators point towards an inflationary cooldown as we move further into the year.
Having the right real estate agent on your side is crucial at this point in time, whether you’re buying or selling. Economic fluctuations, real estate trends and other factors are occurring at breakneck speeds, and only a seasoned real estate agent is capable of keeping tabs on all these criteria so they can work on your behalf. Timing is everything. For that reason, we encourage buyers to reach out to Fine Homes Real Estate, instead of playing the waiting game. Otherwise, you may end up losing out on a great deal at just the right time.
For sellers, the same holds true. We’ll help you market and price your house realistically, according to your particular region, average asking price, your property’s unique selling points, and buyer trends. The real estate waters will be choppy throughout 2024, but they will also be navigable. We’ll do the hard work for you, so you can make informed, clear decisions that will lead to your desired goals. Contact Fine Homes Real Estate today, and let us find the right moment to make your real estate move.
