High interest rates. Budget-crushing inflation. A tough employment market. The GTA has certainly faced its fair share of obstacles over the last couple of years, and yet… the city's real estate market just keeps on swimming.
Despite economic uncertainty, the GTA market – and really, the Canadian market overall – has shown remarkable resilience. So while home prices did decline with the interest rate hikes in the last couple of years, they didn't actually decline all that much, even when buyers all but disappeared.
If you look at the last few months, property prices have come bouncing up again, with a trajectory that could quickly bring us back to where we were before the Bank of Canada started raising rates.
March 2024 followed that upward pattern: the average home price in the GTA was up by 1.3%, sitting at $1,121,615. Right At Home and Property.ca agents are reporting a lot more competition out there. They’re seeing more showings, increased interest in properties, with homes selling faster. Multiple offers are on the rise, too, and so are bully offers.
What’s more, Right At Home and Property.ca showings were up by 21% month over month – which is a good predictor of upcoming sales.
There’s no point waiting for prices to drop.
I've heard plenty of stories about frustrated buyers giving up, or delaying their search until “when the market cools down again.” Prices aren't going to drop – if anything, they'll just keep increasing, especially with the promise of lower borrowing rates ahead. For anybody who says they’re holding out for a better price, my answer is: if you're in Toronto, good luck.
If there is a real estate market that is almost recession-proof, it’s Toronto. Whether you want to point to immigration or to our ongoing struggle with supply, the resilience is here to stay. If you look at the past 40 years, average property prices have grown, steadily and consistently over time. Yes, there have been dips, which is why I say “almost recession proof.” But if you look past those dips and focus on 10- to 15-year windows, you’ll see there has always been growth.
What is behind this resilience?
To put it most simply, the success of the GTA market comes down to the balance of supply and demand. Homes are selling for certain prices because there are buyers out there willing to pay those prices… people want to live in the city, and they want to own the properties they live in. I don’t see that changing.
- Owning a home remains a sought-after ideal in Canada. I’ve seen lots of media coverage encouraging the normalization of renting for life, Manhattan-style. And for some, that has appeal, and even when it doesn’t, it’s the only viable alternative. But for the vast majority of Canadians, home ownership remains the ultimate goal. And unless something fundamental changes, and property stops being considered a way to build wealth, that goal will remain.
- Immigration is a HUGE driver of demand. I’ve talked about this before and I’ll say it again: when you’ve got half a million new people coming into the country and close to half settling in the GTA, all those people need places to live. And while most new immigrants tend to rent first, their eventual plan is ownership.
- This is where the jobs are. As more and more businesses demand that employees return to the office, at least on a hybrid schedule, living closer to work is becoming a greater draw than it’s been since before the pandemic.
- When interest rates change, people adjust. Interest rates were so low for so long that people got used to borrowing money practically for free. But if you look back at borrowing rates over the last 20 or 30 years, what we have now is actually pretty typical. People are starting to realize that our current rates are more the norm than the ultra-low percentages we’ve gotten used to. And they’re adapting – as they always do.
- Renting is expensive. While it’s the only option for many, most people would rather put their money into their own home than towards a landlord’s mortgage.
- We don’t have nearly enough homes to meet demand. Lack of supply is by far the biggest contributor to price resilience. The federal government just announced an aggressive housing plan to unlock 3.87 million new homes by 2031. It’s a promise the National Post has called “utterly daunting” and I can’t say I disagree. But even if they manage to make good on it, I still think the GTA will be a long way from getting the housing we need to achieve real affordability.
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This article was produced in partnership with STOREYS Custom Studio.
