August 2024: Toronto & GTA MLS® home sales: Looking forward?

Greater Toronto, Ontario, Sept 5th, 2024 - MarketWatch, the monthly Toronto Regional Real Estate Board [TRREB] statistical report on residential MLS® activity, came out today and largely reflects the now-mainstream knowledge that we’re most definitely in a home market that continues to cool overall… and while rate reductions by the Bank of Canada certainly help from a home affordability standpoint - obviously - their impact is probably somewhat overstated by many market watchers.

Let’s face it: Every quarter of a point reduction in rates saves someone with a variable rate mortgage about fifteen dollars for every one hundred thousand dollars of mortgage obligation. That adds up, no question; “every bit helps”... but the bigger issue of - simply - home prices still makes ownership a stretch at best for the critical first time buyer: Without that segment of the market, it ripples to the move-up [or downsizing] segment because it’s more difficult for them to sell.

Of course, people in closed mortgages aren’t impacted at all until renewal time, generally speaking. But at least some of the stress of renewing at higher rates is alleviated as rates “soften” and are projected to continue to do so.

The other piece of the equation - the expectation that rates will fall further, combined with generally softening home prices - may result in an outcome for many would-be buyers of, “We’ll wait.” Some will ask, “Why buy something today if you think it’ll be cheaper next month or next year?”.

Overall: The Big Picture

TRREB’s report shows that, overall - meaning all home Classes [Freehold, Condo, etc.], Types [Detached, Semi-Detached, Townhome, Apartment, etc.], and Styles [Bungalow, Two Storey, Sidesplit, Backsplit, etc.] across all of the Board’s geographic market area - 4,975 residential sales were reported by Toronto & GTA Realtors® through TRREB’s MLS® system on the month. Compared to last August’s 5,251 sales volume, that's a 5.3% decline in activity.

Aside from sales of Detached homes within Metropolitan Toronto, there were nothing but negative signs in the August report in terms of both sales volume and average price. The overall average selling price came in at $1,074,425 on the month, all but “flat” versus $1,082,881 a year earlier. All figures quoted are year-over-year [YoY] - unless noted otherwise - comparisons considering the seasonal tendencies of residential real estate.

Somewhat surprisingly, we’re still seeing instances of multiple offers… but those situations are pretty limited to well-presented homes around the “mainstream” / median price points and located in popular areas - especially where inventory levels remain relatively snug. As noted many times before, Bungalows in “Metro Toronto, The GTA, and Beyond” are as popular as ever as “Matures & Empty Nesters” look to downsize and take some tax-exempt dollars off the table - in the case of primary residences - to pad retirement accounts, help kids get into the market, and so on. A Bungalow for sale in Vaughan [York Region, immediately north of Metro T.O.] - for example - attracted six offers and sold within a couple of days of hitting the MLS®.

Specific Numbers by Home Type

In “The 416” area code - Metropolitan Toronto - which specifically includes the former Boroughs of East York, Etobicoke, North York, Scarborough, and York along with the original city core, “Old Toronto” - 484 sales of Detached homes were reported, up 8.3%, at an average sale price of $1,692,239, up 3.2%. The balance of TRREB’s market area - “The 905” area code, generally speaking - saw 1,734 sales in the Detached group, down 3.3%, at an average of $1,336,427, off an even two percent.

Sales of Condominium Apartments had another rough month with Metro Toronto sales volume of 922 units, down 14.8%, at an average sale price of $681,835, off 6%. The rest of the GTA saw 495 units sell, down 4.4%, averaging $661,427, off 0.8%.

Interestingly, the gap in values between Detached homes in Metro Toronto compared to other areas around the GTA has widened from $273,202 to $355,812 YoY. For Condo apartments, however, those differences went from - respectively - $58,382 to just $20,408. Quite likely a function of the inventory situation.

Quoting… from the Report:

Jennifer Pearce, TRREB President:
“The Bank of Canada’s rate cut announced on September 4 will lead to a further improvement in affordability, especially for those using variable rate mortgages. First-time buyers are especially sensitive to changes in borrowing costs. As mortgage rates continue to trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market.”

John DiMichele, TRREB CEO:
“Today’s elevated listing inventory will ultimately recede. We need to maintain a sustained focus on boosting home construction, especially as it relates to producing the right mix of home types to meet consumers’ needs. This new housing also has to be affordable. Municipalities can help by reducing development charges, which are ultimately passed on to home buyers. If people can't find affordable housing in the GTA or surrounding Greater Golden Horseshoe, they will move elsewhere, and not necessarily to other parts of Ontario or Canada. Housing is a key driver of our region's economic development.”

Jason Mercer, TRREB Chief Market Analyst:
“As borrowing costs trend lower over the next year-and-a-half, home buyers will initially benefit from both lower monthly mortgage payments and lower home prices. Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed. Ample choice in the market will help keep price growth moderate, at least in the initial phases of recovery.”

That Inventory Thing…

As the report states, “New listings were up slightly [YoY].” Yes. By 1.5%. But, as we’ve repeated here [ad nauseam], the more relevant figure is TAL - Total Active Listings - and that’s up 46.2%. Forget “newly listed”. Watch the total inventory. [The “secondary” issue with the “New Listings” stat is that it’s clouded by folks terminating their listings and re-writing them… usually coincident with a “price improvement”. Present-day vernacular for, of course, a reduction. “Improvement”, of course, from the prospective buyer’s standpoint… not so much from the seller’s!].

TAL came in at 22,653 as of month-end. “New Listings” on the month totalled 12,547.

Taking “Total Active Listings” and dividing by “Sales” [Volume] gives us “Forward Inventory” - an idea of how many weeks or months it would take to sell all the current listings given a constant rate of sales volume. That comes to a little over 4½ months. That’s getting high from an historical standpoint… and a far cry from the mere weeks of inventory we experienced not too long ago that were prompting calls from far and wide about a “housing shortage”. Horsefeathers. Affordability crisis, yes. Housing shortage? No.

Not surprisingly, homes took “40% longer” to sell: 28 average Days on Market in August versus 20 a year ago. Twenty-eight remains relatively low by historical standards, by the way. Even the “Property Days on Market” which includes time on the market under a previous listing agreement - but only includes listings re-listed with the same brokerage - remains on the low side “historically” at 44.

We appreciate you reading, as always! Best -

Andrew.

Questions? Comments? ...We'd ❤️ to hear from you: Drop us a line here!...

Set Up Your Own Customized SmartSearch

What's your property worth today?

JustBungalows.com Home Page

Browse GTA Bungalows by City / Region

Browse "Beyond the GTA" Bungalows by City / Region