Author John Pasalis is the President of Realosophy Realty, a Toronto real estate brokerage which uses data analysis to advise residential real estate buyers, sellers and investors. He is a top contributor at Move Smartly, a frequent commentator in the media and researcher cited by the Bank of Canada and others.
Toronto’s Housing Market in 2024
WATCH NOW: Toronto’s Rollercoaster Housing Market in 2024: Key Trends & Statistics
As 2024 draws to a close, it’s worth looking back to see how last year’s sales, listings and prices compared to previous years. The low-rise house and condominium (condo) markets both experienced significant cooling, marked by low sales volumes, yet home prices remained resilient.
Sales of low-rise houses, including detached, semi-detached, and townhomes, increased modestly compared to 2023. However, both 2023 and 2024 stand out as the years with the lowest sales volumes for low-rise homes in over two decades. A combination of high home prices and high-interest rates continued to suppress demand, even as buyers adjusted to a new affordability reality.
New listing volumes in the low-rise market were slightly below the long-term average.
While lower-than-average listings combined with 20-year-low sales might suggest a steep drop in home prices, this wasn’t the case. Average prices dipped just 1.5% compared to 2023. Sellers proved unwilling to lower their expectations significantly, resulting in a "sticky" pricing environment typical of slower markets.
The condo market faced its own set of challenges. Sales volumes fell to their lowest levels in over a decade, despite a record number of properties listed for sale.
Even with an abundance of supply, average condo prices declined only modestly, falling 2.4% year-over-year. This resilience in pricing demonstrates the hesitancy among sellers to make significant price concessions, even in a softer market. Some investors decided to list their units for lease when they couldn’t achieve the sale price they hoped for.
As we look ahead, market dynamics will likely hinge on broader economic trends, including interest rate movements and shifts in buyer and seller sentiment.
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By the Numbers: December 2024
The average price for a house in the Toronto area was $1,305,612 in December, unchanged from the same month last year. Last month's median house price was $1,126,258, up 2% from the same month last year.
House sales in December were up 15% over last year, while new house listings were up 31%. The number of houses available for sale at the end of the month, or active listings, was up 22% 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 December, the MOI for houses increased slightly to 3.2.
The average price for a condo in the Toronto Area was $703,217 in December, down 1% from the previous year. The median price for a condo in December was $635,000, down 1% from the previous year.
Condo sales in December were up 26% over last year, and new condo listings were up 34%. The number of active condo listings was up 26% from last year. The MOI increased to 5.2.
Browse detailed monthly statistics for December 2024 for the entire Toronto area market, including house, condo and regional breakdowns below.
Key Issue
Here are my Top 5 risks facing Toronto’s housing market in 2025.
New Condo Completions - Will There Be Issues on Closing?
Many condos set to be completed in 2025 will likely be worth significantly less than what buyers paid for them four or more years ago. At the time of purchase, buyers paid a 30–40% premium over existing resale units, anticipating continued price appreciation. However, condo prices have remained flat over the past four years, meaning these units will not hold the value buyers expected.
Typically, when a property’s value declines below its purchase price, buyers must increase their down payment to cover the shortfall. In 2024, many banks sidestepped this issue by using “blanket appraisals,” which assumed the unit was worth the original purchase price which I reported on last year. However, this approach will be harder to justify in 2025 as the typical decline in value becomes more pronounced.
Will more buyers default on their purchases? That’s likely.
Will we see new condo projects fail because too many buyers can’t close? That seems less probable.
These challenges will likely be resolved quietly. Our federal government, banking regulator, OSFI, and major banks will likely take steps to mitigate the fallout and prevent panic or distress in Toronto’s condo market.
Rental Market - A Lot of Supply, Less Demand
Many of the condos set to be completed in 2025 were purchased by investors, meaning a significant number will likely be listed for rent upon completion. While this is a common trend, the 2025 rental market is expected to be far more challenging.
By the end of 2024, the Toronto Regional Real Estate Board’s MLS system recorded a record number of properties listed for lease. The rental market is now contending with both elevated inventory levels and a likely cooling in demand. This reduced demand is primarily driven by the federal government’s decision to cut population growth targets, particularly the dramatic reduction in non-permanent residents.
In 2024, Canada’s population grew by 1.3 million people, but this growth is projected to slow in 2025 and 2026. As a result, the additional demand for rentals fueled by population growth will decline, putting continued downward pressure on rents.
A Challenging Year for Small Condos?
Last year was particularly challenging for anyone trying to sell a small condo in the Toronto area. These units, typically owned by investors, saw a surge in listings as many decided that 2024 was the right time to sell.
Flat condo prices, falling rents, and relatively high interest rates have made condos a less attractive investment option. With more investors exiting the market than entering, inventory levels have remained elevated.
This trend is likely to continue into 2025.
Economic Headwinds
Canada’s economy is facing several challenges, including the risk of tariffs with the United States. However, one of the key issues in the year ahead will be the imbalance between condo completions and new construction in the Toronto area. For every 10,000 units completed in 2025, builders are unlikely to start a similar number of new units. Housing starts will lag behind completions in 2025 due to the sharp decline in the new housing market.
This slowdown in the construction sector is likely to result in job losses in 2025, which could weigh on Canada’s economy.
I expect both the current and future federal governments to take measures to stimulate the construction of new housing in 2025, including offering significant tax incentives to builders to boost supply.
Interest Rates - Higher for Longer?
Both buyers and sellers are anticipating significantly lower interest rates in 2025. Buyers hope this will enable them to spend more on a home, while sellers hope it will drive home prices higher. However, I suspect there will be a considerable disconnect between expectations and reality when it comes to where rates actually land.
The Bank of Canada is likely to continue cutting interest rates in 2025, which will help lower the rates on variable mortgages. However, variable rates may only drop to around 4%, or into the high 3% range — far from the low rates many buyers are hoping for.
Five-year fixed rates are also expected to remain elevated this year. These rates are tied to the 5-year Government of Canada bond yield, which is strongly influenced by U.S. bond yields. The robust economy in the U.S. has kept bond yields high, and this trend will likely spill over into Canada. As a result, five-year fixed rates in the 4% range may be the lowest we see in 2025.
December 2024
Monthly Statistics
House sales (low-rise freehold detached, semi-detached, townhouse, etc.) in the Greater Toronto Area (GTA) in December 2024 were up 15% compared to the same month last year.
New house listings in December were up 31% compared to last year.
The number of houses available for sale (“active listings”) was up 22% in December 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 December is heading.
The MOI for houses increased slightly to 3.2 in December.
The share of houses selling for more than the owner’s list price fell to 26% in December.
The average price for a house in December 2024 was $1,305,612, was unchanged from the same month last year.
The median house price in December was $1,126,258, up 2% 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 (condominiums, including condo apartments, condo townhouses, etc.) sales in the Toronto area in December 2024 were up 26% compared to the same month last year.
New condo listings were up 34% in December over last year.
The number of condos available for sale at the end of the month, or active listings, was up 26% over last year.
Condo months of inventory increased to 5.2 MOI in December.
The share of condos selling for over the asking price fell to 16% in December.
The average price of a condo in December was $703,217, down 1% from last year. The median price was $635,000, down 1% from last year.
See Market Performance by Neighbourhood Map, All Toronto and the GTA
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