April showers brought May calm for Toronto’s housing market. While the spring selling season is typically characterized by a flurry of activity in the Greater Toronto Area (GTA), the city’s home sales continued at low levels, thanks largely to sky-high mortgage rates.
According to the May Market Watch Report from the Toronto Regional Real Estate Board (TRREB), the GTA saw another relatively tame month. Unlike in springs of the past, Toronto buyers have options – and a lot of them. As TRREB highlights, this meant that buyers benefitted from more negotiating room on home prices. But that’s not enough to get the GTA's would-be first-time homebuyers off the sidelines; they’re waiting for rates to drop for that to happen.
"Recent polling from Ipsos indicates that home buyers are waiting for clear signs of declining mortgage rates,” said TRREB President Jennifer Pearce in the report. “As borrowing costs decrease over the next 18 months, more buyers are expected to enter the market, including many first-time buyers. This will open up much needed space in a relatively tight rental market.”
(Toronto Homes, Shutterstock)
According to TRREB, GTA realtors reported 7,013 home sales through MLS® in May 2024 – a 21.7% decline compared to 8,960 sales reported in May 2023. Meanwhile, new listings entered into the MLS® System amounted to 18,612 – up by 21.1% year-over year. In the City of Toronto specifically, realtors reported 2,701 sales, a figure that's down from 3,267 in May 2023. Furthermore, Toronto saw 7360 new listings hit the market last month, up from 5,742 in May 2023.
Home prices are down in the GTA region compared to last year, but persistently high interest rates have offset this for first-time purchasers. According to the report, the MLS® Home Price Index Composite benchmark was down by 3.5% on a year-over year basis in May 2024, and the average GTA selling price of $1,165,691 was a 2.5% decrease from May 2023’s $1,195,409. On a seasonally adjusted monthly basis, the average selling price edged up slightly compared to April 2024.
In Toronto, home prices dropped from $1,195,592 in May 2023 to $1,193,202 in May 2024.
“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year,” said TRREB Chief Market Analyst Jason Mercer. “We have seen selling prices adjust to mitigate the impact of higher mortgage rates. Affordability is expected to improve further as borrowing costs trend lower. However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases.”
Let’s not forget about the rapidly-growing GTA population that will add to this competition in the coming years.
“In order to have an affordable and livable region over the long term, we need to see a coordinated effort from all levels of government to alleviate our current housing deficit and to provide housing for new population moving forward,” said TRREB CEO John DiMichele. “On top of this, governments need to ensure the delivery of infrastructure to support our growing population. The economic health and liveability of our region depends on the timely completion of public transit projects, including better transparency and clear timelines on the completion of the Eglinton Crosstown LRT.”
In the meantime, all eyes will be on the Bank of Canada’s interest rate announcement later this morning. If all goes according to economists’ forecasts, the country could see its borrowing rate lowered (for the first time since March 2020) by 25 basis points. It won't be enough to open the floodgates for a sea of would-be homeowners...but it’s something.
