2024 marked transitionary year for GTA real estate
December 2024 TRREB recap
For Greater Toronto Area home buyers and sellers, the 2024 market can be summed up by two distinct eras: before and after interest rate cuts. While the steep cost of borrowing kept a lid on buying activity for the first six months, demand warmed rapidly after June – when the Bank of Canada started to lower its benchmark interest rate – as improved affordability coaxed buyers back into the market.
“Borrowing costs were top of mind for home buyers in 2024. High interest rates presented significant affordability hurdles and kept home sales well below the norm,” stated Toronto Regional Real Estate Board (TRREB) President Elechia Barry-Sproule, in the board’s release.
“The housing market did benefit from substantial Bank of Canada rate cuts in the second half of the year, including two large back-to-back reductions. All else being equal, further rate cuts in 2025 and home prices remaining below their historic peaks should result in improved market conditions over the next 12 months.”
Supply surge limited price growth
From an overall perspective, though, the market outperformed 2023 by just a slight margin. According to TRREB, a total of 67,610 properties sold over the course of the year, a year-over-year increase of 2.6%. However, those on the house hunt enjoyed much greater choice in terms of supply as the number of newly-listed homes rose by 16.4%, with 166,121 listings hitting the market.
That listings rose by a greater rate than transactions “effectively kept a ceiling on any widespread price growth,” states TRREB’s release; the average home price remained flat, dipping -0.7% year over year to $1,117,600 – a dollar difference of just $8,663.
After a robust late autumn market, December sales were relatively quiet – a seasonally typical development, as buyers and sellers take a holiday pause. There were a total of 3,359 sales during the month, down -1.8% from the same time period in 2023. Compared to the 5,875 homes sold in November, December sales were down 42.8%.
The number of newly-listed homes rose by 20.2% to 4,681, while the average home price dipped by -1.6% YoY to $1,067,186.
Buyers flocked to houses while condo sales slumped
Toronto Regional Real Estate Board
Demand for single-family home types, such as detached, semi-detached, and townhouses, remained solid over the course of the year, which helped bolster price growth. The condo segment, however, experienced deep declines; high interest rates dissuaded first-time buyers from entering the market, and also whittled returns for real estate investors. Many of the latter group attempted to offload their units to avoid losses, which flooded the market with condo inventory.
“Market conditions varied by market segment in 2024. Sales of single-family homes, including detached houses, increased last year, whereas condo apartment sales were down. Many would-be first-time buyers remained on the sidelines, anticipating more interest rate relief in 2025. The lack of first-time buyers impacted the less-expensive condo segment more so than the single-family segments,” said TRREB Chief Market Analyst Jason Mercer.
Will Toronto home prices rise further in 2025?
There are a number of factors at play that will likely heat GTA home prices over the coming year. The first is that interest rates are poised to lower. Following five consecutive BoC rate cuts between June and December 2024 – including two back-to-back “jumbo” 50-basis-point cuts in October and December – economists believe the central bank isn’t quite through with its cutting cycle. Several big bank consensus say the Bank to end up at a rate of around 2.5 - 2.75% (from the current 3.25%) in the second half of this year. That could play out in roughly three to four quarter-point cuts over the coming months, pending how the next Canadian inflation and job market reports look.
However, when it comes to central bank rate cuts, nothing is certain – and whether or not threatened 25% tariffs from our American neighbours materialize will certainly impact this forecasted path.
Demand will also be driven by new mortgage reforms, which have made it easier for first-time home buyers to get into the market. These include extending the maximum amortization period for first-time buyers and purchasers of new construction to 30 years, as well as extending the maximum purchase price for insured mortgages to $1.5 million. This will allow buyers to purchase higher-priced homes with smaller down payments, which will be especially effective in higher-priced markets such as Toronto and Vancouver.
You can learn more about these mortgage policy changes in the video below:
Watch: 2025 Mortgage Rule Changes for Home Buyers
Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.