Toronto’s Fall Housing Market Remains Cool As Rate Cuts Not As Certain

While the Toronto area experienced an unseasonably warm September this year, the housing market remained cool.

Sales are up modestly over last year, but the overall dynamics remain the same — homes and condos are seeing far fewer showings from buyers when compared to six months ago, and new listing volumes continue to grow faster than sales which is contributing to inventory levels increasing. 

The condo market has reached 6.6 months of inventory (MOI) in September, while the market for houses reached 4.4 MOI. This is a dramatic increase from six months ago, and the next section , I will unpack some of the dynamics behind this sudden shift in the Toronto area’s housing market. 

Over the past month, I have been suggesting that the housing market is likely to be far more competitive in the new year than it is today. 

I suggested this when it appeared at the time that the Bank of Canada was going to cut rates three times between now and January, with one of those cuts possibly being a 50 basis point cut. Fixed rates also appeared to be trending down, suggesting a high likelihood that fixed-rate mortgages would be in the 3% range at the start of the spring market. Lower rates combined with the federal government’s changes to insured mortgages, increasing the cap on insured mortgages to $1.5M from the previous $1M and extending amortizations for first-time buyers to 30 years were all factors that would likely stimulate buyers to jump back into the market. 

But this past week has shown us that the factors that determine the future path of interest rates can turn on a dime. 

Two weeks ago, the United States had a very strong jobs report adding 254,000 jobs in September which made the markets less certain that the Federal Reserve would cut interest rates as aggressively as markets were predicting. A reminder that when the economy is booming, the central bank has less incentive to lower rates aggressively since lower rates will stimulate the economy even further. 

The strong US jobs report caused 5-year bond yields to trend up, and because Canada’s bond market is highly correlated with the US bond market, Canada also saw 5-year bond yields surge by 35 basis points. 

Suddenly, fixed-rate mortgages might be trending up in the near term, not down. 

While a lot can change in the months ahead, this dramatic shift in sentiment is just a reminder that there is still a lot of uncertainty regarding economic conditions, the future path of interest rates and the housing market. 

This uncertainty has elevated recently due to geopolitical risks in the Middle East. If Israel decides to retaliate against Iran by targeting their oil facilities, this could lead to a surge in oil prices, which would make it even harder for central banks to cut rates when energy prices are surging. 

In short, it’s possible that some combination of robust economic conditions in North America coupled with rising energy prices may lead to far fewer interest rate cuts than markets were expecting, which would impact the future path of the housing market in 2025. 

By the Numbers: September 2024

The average price for a house in the Toronto area was $1,332,940 in September, down 2% from the same month last year. Last month's median house price was $1,150,000, down 3% from the same month last year.

House sales in September were up 9% over last year, while new house listings were unchanged. The number of houses available for sale at the end of the month, or active listings, was up 27% over last year. 

The current balance between supply and demand is reflected in the MOI, which measures inventory relative to the number of sales each month. In September, the MOI for houses increased to 4.4.

The average price for a condo in the Toronto Area was $706,625 in September, down 4% from the previous year. The median price for a condo in September was $637,250, down 5% from the previous year.

Condo sales in September were unchanged from last year, but new condo listings were up 7%. The number of active condo listings was up 32% from last year. The MOI increased to 6.6. 

Browse detailed monthly statistics for September 2024 for the entire Toronto area market, including house, condo and regional breakdowns below. 

Monthly Statistics

House Statistics

House sales (low-rise freehold detached, semi-detached, townhouse, etc.) in the Greater Toronto Area (GTA) in September 2024 were up 9% compared to the same month last year.

New house listings in September were up 10% compared to last year.

The number of houses available for sale (“active listings”) was up 27% in September compared to the same month last year.

The Months of Inventory ratio (MOI) looks at the number of homes available for sale in a given month divided by the number of homes sold in that month. It answers the following question: If no more homes came on the market for sale, how long would it take for all the existing homes on the market to sell, given the current level of demand? The higher the MOI, the cooler the market is. A balanced market (a market where prices are neither rising nor falling) is one where MOI is between four to six months. The lower the MOI, the more rapidly we would expect prices to rise.  

While the current level of MOI gives us clues into how competitive the market is on-the-ground today, the direction it is moving in also gives us some clues into where the market September is  heading. 

The MOI for houses was up to 4.4 for September.

The share of houses selling for more than the owner’s list price increased to 31% in September.

The average price for a house in September 2024 was $1,332,940, down 2% from the same month last year.

The median house price in September was $1,150,000, down 3% over last year.

The median is calculated by ordering all the sale prices in a given month and then selecting the price at the midpoint of that list such that half of all home sales are above that price and half are below that price. Economists often prefer the median price over the average because it is less sensitive to big increases in the sale of high-end or low-end homes in a given month, which can skew the average price.  

Condo Statistics

Condo (condominiums, including condo apartments, condo townhouses, etc.) sales in the Toronto area in September 2024 were unchanged compared to the same month last year.

New condo listings were up 7% in September over last year.

 

The number of condos available for sale at the end of the month, or active listings, was up 32% over last year.

Condo months of inventory decreased slightly to 6.6 MOI in September. 

The share of condos selling for over the asking price decreased to 18% in September.

The average price of a condo in September was $706,625, down 4% from last year. The median price was $637,250, down 5% from last year.

Regional Trends

Houses 

Sales were up by 21% in Peel followed by Halton at 11% and York at 10%. Average prices were up by 2% in Halton but down modestly across the other four regions. New listings were up across all four regions with York seeing the biggest increase at 19%. Months of inventory were up across all regions.

Condos

Condo sales were up by 17% and 9% in Halton and York regions, respectively while Durham saw the sharpest decline in sales at 17%. Average prices were down across the GTA. New listings and MOI were well above last year’s level for all regions. The City of Toronto has the highest MOI across all five regions. 

Browse Real-Time Market Trends on MoveSmartly.com:

See Market Performance by Neighbourhood Map, All Toronto and the GTA

Greater Toronto Area Market Trends

City of Toronto Market Trends

York Region Market Trends

Halton Region Market Trends

Peel Region Market Trends

Durham Region Market Trends

 

John Pasalis is President of Realosophy RealtyA specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).

Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn

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