September Newsletter Real Estate Market Update
The Greater Toronto Area experienced the best home sales result for the month of July since 2021. Sales were also up relative to listings, suggesting a modest tightening in the market compared to last year. Transactions have risen by 35.5% over the last 4 months, which might look like the long-awaited recovery is here but this increase in the number of sales is rooted in price adjustments.
“Improved affordability, brought about by lower home prices and borrowing costs, is starting to translate into increased home sales. More relief is required, particularly where borrowing costs are concerned, but it’s clear that a growing number of households are finding affordable options for homeownership,” said Toronto Regional Real Estate Board (TRREB) President Elechia Barry-Sproule.
And yet, inventory continues to increase as new listings come to market faster than the number of sales can clear them out.
BMO Capital Markets has been clear about what is holding the market back: the spread between what sellers want and what buyers are willing to pay. Robert Kavcic, senior economist, describes it as a “wide bid-ask spread” that has prevented the market from clearing, leaving listings to languish. The only durable remedy is to close that gap.
The evidence bears this out: in the GTA, values have fallen 5.5 per cent in 12 months. The modest easing in prices has been enough to coax more buyers back into the market.
What this means for Sellers and Buyers:
- Buyers who have been sitting on the sidelines are taking advantage of increasing affordability as prices soften.
- Buyers have more leverage for negotiating price, conditions, and other offer terms because of a 25% increase in the number of available listings.
- Both the detached and condo markets are favouring listings at the lower end of prices; detached listings below $1M and condos under $600K are the biggest portion of sales.
- Sellers should adjust expectations on the length of time it will take for their listing to sell; LDOM (Listing Days on Market) is up by 25% year over year, from an average of 24 days on market to 30 DOM.
- Sellers looking to optimize their outcome must ensure a competitive price, strategic property improvements, and buyer-centred property listing presentation.
What this chart says to me:
- 2022 was a statistical anomaly, and prices since have been stagnant typically, without major fluctuations in either direction.
- Prices are currently trending slightly downward, recognizing that all property types are reflected in this data.
- Seasonal variations, however, continue to reflect established patterns of prices peaking in Spring and Fall.
Is this the right time to sell?
We are entering into the second busiest time of year in the real estate market. Looking at the graph below, I liken the annual real estate sales statistics (these taken from 2024) to a two-humped camel. The first “hump” is the Spring market: a well-known fact is that buyer interest surges in the first half of the year. Sellers may not, however, be aware that buyers come back to house hunting after Labour Day. With a return to regular routines, and thoughts of upcoming winter and holidays, a renewed push to find their perfect home heats up buyers just as the temperatures begin to cool.
Downsizing to a Condo now still makes financial sense:
While the news for sellers seems bleak, the decision to sell now or later could depend on whether you’re also planning to buy. This is a great market for downsizers who plan to buy a condo as their next home. Condo prices have dropped more dramatically and listing inventory has increased more substantially than detached homes.
.jpg)
Sources:
https://realestatemagazine.ca/foch-canadian-home-sales-are-rising-because-prices-are-falling/
https://ontariomlp.ca/wp-content/files/pdf/market-stats/market-watch/mw2507.pdf
https://www.mortgagesandbox.com/toronto-real-estate-forecast
Post a comment