GTA home prices eased in August as condo sales plummet
August 2024 TRREB update
Penelope Graham, Director of Content
The Greater Toronto Area housing market continued to be well-supplied and balanced during the month of August, with little annual change in sales or price growth.
The latest data released by the Toronto Regional Real Estate Board shows a total of 4,975 homes traded hands over the course of the month, marking a -5.3% decline from the same time frame in 2023. On a monthly basis, transactions fell further, down -7.7% from July - but that’s to a lesser extent than was seen between that month and June, when the difference dropped by double-digits, at -13.2%.
Plenty of new housing came to market over the course of the month, offering buyers plenty of choice, with 12,547 homes listed. However, that looks to be tapering off, compared to the onslaught of new supply in previous months; the year-over-year difference in August was just 1.5%, compared to a whopping 18.5% in July.
The average price for GTA real estate came to $1,074,425, roughly flat from last year (at -0.8%), but edged down by -2.9% from the previous month.
Rate cuts to fuel market in coming months
The month’s largely stagnant activity likely won’t last long, as anticipated interest rate cuts are set to materially improve affordability for home buyers.
“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,” stated TRREB President Jennifer Pearce. “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.”
Analysts widely expect another two quarter-point rate cuts from the central bank in its upcoming October and December announcements, which would bring Canada’s benchmark cost of borrowing to 3.75% by the end of 2024. At least another four similar cuts are anticipated in 2025, potentially lowering the rate to 2.75%. That will considerably pull down variable rates – and fixed rates, due to resulting lower bond yields – and will finally add fuel to what has been a chilly selling season.
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“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,” said TRREB Chief Market Analyst Jason Mercer.
The condo correction continues
Toronto Regional Real Estate Board
The GTA condo market has been going through a deep correction, partly due to the fact that many first-time buyers remain cash strapped by historically high interest rates. Investors, who have also been stymied by steep borrowing costs, have looked to offload non-cash-flowing units, flooding the market with inventory in recent months.
August sales showed demand for units continued to plummet, down -11.4% year over year with 1,417 sold. Detached, single-family homes led sales in terms of volume, with 2,218 transactions, and also marking the smallest annual sales decline, at -1%. Semi-detached and townhouses saw declines of -3.4% and 6.1%, with 427 and 872 sold, respectively.
Home prices hold firm within the City of Toronto
Toronto Regional Real Estate Board
Sales cratered the most within the City of Toronto in August, down -8.6% annually with 1,718 transactions. A total of 4,177 homes were newly brought to market, inching up 4.2% year over year. However, the city still boasted some home price growth, with the average rising 2.2% to $1,029.069.
The 905 saw sales slide to a lesser degree, down -3.3% with 3,257 homes trading hands, while new listings rose by 4.5%, with 8,370. However, the bulk of price loss occurred in the 905-area markets, pulling the average down by -2.4% to $1,098,349.
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Penelope Graham, Director 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.