Toronto Real Estate News: August 2024

Well, it’s been another interesting month in Toronto real estate news. Here’s what happened and why – and our advice if you’re in the market to buy or sell a home right now: 

Interest Rates, Inflation and Economic Uncertainty

Interest Rate Announcement: In July 2024, the Bank of Canada decreased the overnight interest rate by 0.25% for the second consecutive month, to 4.5%. The decrease instantly helped homeowners with variable-rate mortgages and will allow home buyers to qualify for higher mortgages and benefit from lower payments. 

Unfortunately, the rate excitement was dulled by a tumultuous week for stock markets around the globe. It started on Monday in Japan, with the Nikkei index suffering its worst day since 1987 (Black Monday). As Canadians celebrated the Civic Holiday August long weekend and the TSX was closed, stock markets around the world suffered huge losses. While most markets have started to recover, a lot of fear, greed and uncertainty remains. 

Here’s why stock market investors are nervous:

• What happens in the American economy ripples throughout the world, and investors are worried that the US isn’t decreasing interest rates fast enough to prevent a recession. If they do fall into recession, their trading partners (including Canada) will feel the pain, too.  A stock market sell-off is one way to communicate unease and encourage a rate reduction sooner-vs later.
• Fear and greed: A bad US jobs report, Warren Buffet selling off tech stocks, currency concerns, a chaotic upcoming US election, fear of an Artificial Intelligence tech bubble, Japanese currency fluctuations…the list goes on and on.
• Chaos: In July, the US saw one presidential candidate get convicted of a felony and then shot at a rally, while the other was replaced by a new candidate a mere 90 days before the election. We have multiple wars, climate/weather/fire crises, escalating tensions in the Middle East, and another COVID wave…there’s a lot of uncertainty in the world right now. 

The one sure thing we know about investors is that they don’t like uncertainty. 

So what will happen next? The US will likely decrease interest rates in September, helping calm investor fears. Canadian economists predict another 0.5% rate decrease in Canada by the end of the year, with another cut happening in September. If both of those things happen, it’ll signal good news for Toronto’s real estate market…but we expect buyers to continue to return to the market slowly. 

Longer Amortization for First-Time Buyers

Don’t get too excited; this headline sounds better than it really is.

With interest rates still high and an ongoing affordability crisis, the Canadian government is trying to help first-time buyers by extending the amortization of insured mortgages on newly built properties to 30 years instead of 25, effective August 1, 2024. A longer repayment period allows for lower monthly payments, helping ease some of the pain of the higher interest rates. 

While this sounds like great news, there’s a catch. A few catches, actually:

• Mortgages must be insured, meaning the buyer has less than a 20% downpayment. 
• The longer amortization period only applies to newly built homes and condos, which make up a very small percentage of real estate sales. 
• In Toronto, almost every condo developer requires down payments of 20% or more, making this program almost irrelevant to Toronto buyers. That’s probably not a coincidence – the government does NOT want to fuel Toronto housing prices.  

While lower monthly payments are helpful in the short term, they do mean that you’re paying a lot more interest overall, so if you somehow manage to qualify for the longer amortization period, make sure to talk to your lender about the math. 

Toronto’s Real Estate Market Stats: July 2024

Also this week, the Toronto Regional Real Estate Board (TRREB) released the statistics for July 2024. There weren’t a lot of surprises:

• There are a lot of NEW listings in the GTA again this month…up 18.5% vs. last July. 
• More concerningly, there are 55.5% more ACTIVE listings on the market than last year at this time. 
• Good news: the number of home sales was 3.3% higher than last year…while that isn’t high enough to absorb the increase in listings, it’s a step in the right direction.
• It’s taking longer to sell. In Toronto, the average home sold in 35 days in July vs. 23 days last July). 
• The average price of a home is lower than last July, and lower than last month. Here’s how prices changed vs July 2023 by type of property:
  • Detached houses (+0.5%)
  • Semi-detached houses (-0.4%)
  • Townhouses (-0.9%)
  • Condos (-0.5%)
• The condo market continues to move slowly.
  • There were 994 condo sales in the City of Toronto in July 2024…but with 6,141 active condo listings, we are clearly in Buyer Market territory – in other words, the buyers hold more power than the sellers. At this rate of sales, it would take 6 months to sell everything that’s already listed for sale – not including any new listings. 
  • When there are that many more condo sellers than buyers, prices usually go down before they come back up. We expect to see lower prices in the short term, with a market rebound dependent on interest rates low enough to bring back first-time buyers and investors. 
• The stats in the 905 region (ie, the suburbs) are bleaker, with price decreases across the board compared to last July:
  • Detached houses (-1%)
  • Semi-detached houses (-4.5%)
  • Townhouses (-4.2%) 
  • Condos (-5.7%) 

Our Best Advice Right Now

Despite the stats and uncertainties, our overall advice hasn’t changed:

• Don’t try to time the market – Move for lifestyle reasons, not because you think you can predict the future. 
• If you’re looking to buy and sell at the same time: Do the harder thing first. If you’re selling a condo and moving to a house, you should probably sell before buying. If you’re moving from the 905 to the 416, sell first. Make sure to involve your REALTOR in your decisions so you understand the relative risk of the move you want to make. [Related: Should I Buy or Sell First?]
• Always have a Plan B If you’re upsizing or downsizing, talk to your mortgage lender and your REALTOR to understand all of your options. 
• If you’re selling: Everything matters. You need to be priced right and reflect the current market realities. You need to look good (this is where staging can help). Your agent needs to be creative with their marketing. It needs to be easy for buyers to see your home. Your agent needs to be skilled in negotiations. 
• If you own a condo: Don’t despair. Toronto’s housing shortage is getting worse, not better (Read: Toronto’s New Condo Sales Plunge 57%, Hit 27-year Low in ‘Catastrophic’ Drop). In the medium to long term, condos will play a huge role in helping resolve our housing problems. This may actually be a buying opportunity if you can stomach the interest rates in the short term. 

Stay tuned for our new blogs with detailed advice if you’re already in the market to buy or sell or are thinking of making a move in the fall. Afraid you’ll miss something? Scroll to the bottom of this page to receive our weekly blog recap. We promise we’ll never spam or harass you.