Toronto Area Real Estate Market Report: April 2024

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WATCH NOW: John talks about the latest monthly numbers

High home prices and high interest rates have kept many home buyers on the sidelines, resulting in a record low volume of sales for detached homes in the month of March.

However, despite the low sales volume, the market for detached homes remained competitive because the number of detached homes available for sale also reached a record low in March.

The low inventory levels can, at least in part, be explained by the low sales volumes. Far fewer people are upsizing in today's higher interest rate environment, which means they are not buying a home and are not selling their existing home, leading to a decline in sales and active listings.

However, the other structural change we are seeing in the housing market is that more people are moving out of their existing homes, either due to upsizing or relocation, and not selling their existing homes. They are holding their existing homes as investment properties. 

Over time, this has reduced the stock of homes that can be purchased by people who intend to use them as their principal residence. This means that the declining number of resale homes available for sale every year isn't a symptom of a lack of supply but the result of the increasing share of homes bought by investors who convert the homes to rental properties. 

Politicians and housing experts often dismiss the role that real estate investors play in our housing market. In doing so, they ignore their impact on housing affordability in Canada and the significant change in the role that houses play in Canada's society and political economy.

Owning a home provided families with certainty and security in their housing needs and an investment that could help fund their future retirement. As Canada sees more homes bought by investors, a generation of Canadians is being shut out of owning a home, which means they are losing the housing security previous generations had and that long-term investment to help fund their retirement. 

By the Numbers: March 2024

The average price for a house in the Toronto area was $1,373,316 in March, unchanged over the same month last year. Last month's median house price was $1,218,500, also unchanged over last year.

House sales in March were down 6% over last year, while new house listings were up 17%. 

The number of houses available for sale at the end of the month, or active listings, was up 42% over last year. 

The current balance between supply and demand is reflected in the MOI, which is a measure of inventory relative to the number of sales each month. 

In March, the MOI for houses fell slightly to 1.8.

The average price for a condo in the Toronto Area was $728,585 in March, which is unchanged over last year. The median price for a condo in March was $670,000, up 1% over last year.

Condo sales in March were down 15% over last year, and new condo listings were up 19% over last year. The number of active condo listings was up 49% over last year. The MOI decreased slightly to 3. 

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

WATCH NOW: John talks about Federal Government's change to immigration policy

Last week, Canada’s immigration minister, Marc Miller, announced that the Liberal federal government plans to reduce the number of non-permanent residents (NPR) in Canada from the current 6.2% share of total population to 5% over the next three years.

Ten years ago, NPRs made up roughly 2% of Canada’s population, and since then, the surge in NPRs has contributed to Canada’s rapid population growth.

On the surface, this reduction doesn’t sound like a noteworthy announcement that will have much of an impact, but a closer look at the data makes it clear that this is a significant shift in policy and one that will have wide-reaching effects, particularly on the housing market. 

The number of NPRs in Canada in the fourth quarter of 2022 was roughly 1.7 million (M), which increased to just over 2.5M a year later, an 800,000 (800K) increase. For the federal government to reduce the portion of NPRs to 5% of the population, the number of NPRs in Canada would have to decline by around 450K people over the next three years. 

While this change may not have a drastic effect on the number of NPRs in Canada immediately, it will have a significant effect on how quickly Canada’s population grows each year. Over the next three years, while roughly 450K people will arrive in Canada due to net immigration of permanent residents, a corresponding decline of roughly 150K non-permanent residents will result in Canada’s population growing by roughly 300K people each year. This means that Canada’s population, which grew by 1.2M in a single year last quarter, may grow by only 300K per year 12 months from now. 

This graph outlines Canada’s population growth each year and the projected growth if the Liberals achieve their target. 

This dramatic change in managing Canada’s population growth is a significant change in approach by Liberal federal government, one that is a game-changer for our housing affordability crisis.

For years, the Liberals have argued that Canada’s housing crisis is due to a lack of supply and that the only solution is to build more homes, the same argument many industry experts have been making for years. By insisting on supply-side only solutions, and ignoring any calls to better manage demand for housing (which includes increased demand from rapid population growth), the government and many experts have been suggesting that Canada could restore affordability by tripling the number homes built over the next ten years, a massive increase in supply from the current average of just over 200K homes built yearly since the 1990s.

Bank of Montreal economists Doug Porter and Robert Kavcic were among the few economists to disagree, rightly arguing that ramping up housing supply takes a very long time, due to need to increase available labour, amongst other challenges, and that to address housing affordability in the short term, policymakers need to look at better managing the demand for housing. 

In a recent interview, Kavcic had this to say about the federal government’s change to NPR target numbers:

“This is attacking the demand curve now, which is a complete change in philosophy for policy makers, and one that we think is actually going to work.”

Kavcic is correct; assuming these targets are reached, this approach is actually going to work  — but it’s important to note that this doesn’t mean that houses will suddenly be more affordable in the near-term.

By reducing Canada’s annual population growth rate, the federal government is achieving several important goals.

Canada’s previous approach to the housing crisis, which focused only on trying to increase supply while our population continued to grow far more rapidly ensured that our housing shortage and affordability crisis would only get worse each year. 

Reducing Canada’s population growth to roughly 300K people per year will take some pressure off home price appreciation in the years to come. Canada will still have a housing shortage, but the shortage will not be getting worse each year, and, in fact, housing completions are likely to outpace population growth which means Canada will be gradually reducing its overall shortage.

This is not an immediate solution to our housing affordability crisis, but is a correct and necessary first step. 

I also believe that this change in approach will resonate far more with all who are increasingly concerned about housing affordability, particularly as supply targets continued to be missed as our population reached a record high growth over the past few years. 

WATCH NOW: John explains Federal Government new rental policies

Following the federal Liberal government's significant changes to its non-permanent resident policies last month, I was hopeful that we would see equally meaningful housing policy announcements in its upcoming spring budget to be released later this month. 

Last week, the Liberals announced one of the policies we can expect to see: a Renters' Bill of Rights, which they argue will make renting fairer for Canadians. Unfortunately, it does nothing to make renting fairer and could end up costing taxpayers hundreds of millions of dollars if the federal government proceeds with it. 

Prime Minister Justin Trudeau described his proposed policies as follows:

"Our upcoming budget is going to make renting fairer. That means making sure you can see what previous tenants of your apartment paid so you can negotiate a fair deal. It means making sure that your rent payments are counted by the bank towards your credit score. It doesn't make any sense for someone who pays $2,000 a month in mortgage payments to get credit for it, but not someone who is paying $2,000 in rent."

Negotiating a Better Rent?

Knowing what a previous tenant paid for a given unit several years ago will not help a tenant negotiate their rent today — something we can already see in the resale home market. The price a home sold for three years ago, or even ten years ago, is completely irrelevant when determining the market value of that same home today.

The market value of a rental today is driven by the current market dynamics and the most recent comparable units that have been rented. With Canada's vacancy rate hitting a record low of 1.5% in 2023 and rent growth a record high of 8%/yr amidst record-high population growth, it should go without saying that these conditions do not empower renters to negotiate their rent, when they are competing for scarce rental units. 

Achieving the Liberal's promise of making historical rent prices available would involve developing a national database of rental transactions, similar to the MLS system that real estate agents use, but far more extensive because it would include private rentals as well.

Leaving aside the exorbitant cost of such a system (and questions about whether we want to embark on such a project so quickly after the ArriveCan tech debacle), I'm not sure how policymakers will force private landlords to register their rentals on a national database. 

This potentially costly initiative has no meaningful upside for the average tenant. 

Including Rent Payments in Credit Score Reports

The proposal to include rent payments in the credit score report of renters is a solution in search of a non-existent problem as no tenant has been prevented from buying their first home for this reason. 

The real barrier to buying a home is that, through Canada, home prices and rents are way too high, making it harder for renters to save for that ever-bigger down payment. 

Most first-time buyers have good credit and some have bad credit, but very few have no credit history, which includes credit card, car loans and other such history. 

In addition, building system requiring private landlords to record how timely tenants are with their monthly rent payments would be incredibly complex and expensive; many private landlords are small mom-and-pop investors who would have to record this information each month manually. 

Rather than wasting hundreds of millions of dollars on building a national database of rental listings and price history and a system to record rent payments for credit scoring, the federal government should be spending our money on building non-market affordable rentals for Canadians — a measure that would truly be a game changer for renters.

WATCH NOW: John explains why some supply side arguments are less useful

The latest is a report from the Task Force for Housing and Climate, which is made up of politicians, academics and private sector stakeholders, with over 140 policy actions they recommended for federal, provincial and municipal governments.

While all of this effort is welcomed given the extent of our housing affordability crisis, it once again shows that good intentions alone are not enough when it comes to housing policy. It takes very little for policies to incentivize the wrong behaviour in the market rather than the behaviour we want to see. 

Take for instance, the task force’s recommendation to eliminate unit maximums on all forms of residential housing. 

First, some background on our need for more family-sized housing supply in Ontario and other regions of Canada, that is, homes large enough to accommodate a 4-person family. 

Most family-sized homes are currently low-rise homes (detached, semis, rowhouses) and the number built yearly has declined over the past twenty years, from 50,000 annual competitions to under 30,000.  

Where such homes already exist, many have advocated for more permissive zoning to allow more low-rise options to fill the gap. 

In most municipalities in Canada, the vast majority of land allocated for residential housing only permits single family homes, particularly detached homes. The federal Liberal government’s Housing Accelerator Fund requires municipalities to remove this single-family zoning restriction by allowing up to four units on any residential lot to access funding. The City of Toronto legalized fourplexes throughout the city in 2023. 

A fourplex that permits up to 1,500 sq ft per unit (as an example) would allow one single-family owner-occupied home to be converted into four family-sized units. 

While some home owners may look into this as a solution to housing multiple generations of family together, this move is largely meant to encourage investors to provide more low-rise housing options for rent.

The Task Force’s recommendation appears to be rooted in the belief that governments should get out of the way and let investors build whatever type and size of housing is most profitable — if we are encouraging four units, where there was once only one, why not encourage as many as possible? 

If unit maximums are removed, that same investor could build 15 to 20 small studio apartments rather than four family-sized units, or more likely, any number in between.

While this sounds good in theory, we have already seen why this move did not help provide family-sized housing rental units as was hoped for during the GTA’s condominium (condo) boom over the past few decades. 

Stepping out of their past role of building permanent rental housing, all levels of government in Canada had hoped that mom-and-pop investors buying condo units would provide some of this needed family-sized housing. But instead we have seen the ever shrinking size of condo units instead; investing in small micro condos of 500 sq foot allows an investor to acquire more and rent out each for more than can be collectively charged for a larger unit. Families have effectively been shut out of this supply boom because it’s more lucrative to build tiny condos than family-sized condos. 

Now we risk re-running the same ineffective play in the low-rise home segment of the market.

Building five 300 square foot studio apartments could earn significantly more revenue than one 1,500 square foot apartment (while the former would mean more construction costs, the additional revenue earned over time would offset this). 

Does this mean lifting unit maximums is a terrible idea? Not exactly! 

My argument is that lifting unit maximums on every residential lot in every region in Canada so that ‘the market can do its thing’ is risky. 

But in some cases, lifting unit maximums with conditions may be an optimal strategy for building the homes and communities we need. If governments want to rely on the private sector to build student housing near universities and colleges, lifting unit maximums may be an appropriate strategy to build small, less expensive rental units that meet students' needs. 

In other cases, in areas of large lot sizes which permit a relatively high interior square footage for each unit, increasing maximum unit sizes would be an optimal strategy. For example, a property permitting four 2,500 square-foot units may be uneconomical to build because the rent on such a large unit may not be adequate to support the construction costs. But if the maximum number of units for a property like this is increased to eight units each 1,250 square-foot in size the project is more likely to be financially economical for the investor and can result in eight family-sized rentals. 

After years of restrictive zoning requirements that has stalled our ability to build denser housing and the communities we need, it’s understandable that experts and eager politicians hope that the unleashing the market will provide a win-win solution to our housing shortage.

However, as with far too many of our housing policies, it’s this failure to understand and forsee the full dynamics of market when it comes to housing that has contributed to our shortages in the first place. 

Proceeding recklessly now will only ensure the same unintended consequences and worsening housing crisis.

House Statistics

House sales (low-rise freehold detached, semi-detached, townhouse, etc.) in the Greater Toronto Area (GTA) in March 2023 were down 6% compared to the same month last year.

New house listings in March were 17% compared to last year.

The number of houses available for sale (“active listings”) was up 42% in March 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 may be heading. 

The MOI for houses dipped to 1.8 in March, down from 4 MOI in October. 

The share of houses selling for more than the owner’s list price increased to 54% in March.

The average price for a house in March was $1,373,316 in March 2024, unchanged compared to the same month last year.

The median house price in March was $1,218,500, unchanged 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 March 2023 were down 15% over the same month last year.

New condo listings were up 19% in March over last year.

The number of condos available for sale at the end of the month, or active listings, was up 49% over last year.

Condo months of inventory decreased slightly to 3 MOI in March. 

The share of condos selling for over the asking price increased to 27% in March.

The average price for a condo in March was $728,585, unchanged over last year. The median price for a condo in March was $670,000, up 1% over last year.

Regional Trends

Houses 

All five regions saw sales decline over last year. Halton saw average prices decrease by 2%, while all other regions saw no change in average prices. All five regions saw significant increases in new listings in March, while the MOI was above last year. 

Condos

Condo sales were down in all five regions in March. Average prices were down in Halton and York, unchanged in Toronto and up slightly in Durham and Peel. The MOI is above last year’s level for all 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