Toronto Housing Market Report — July
What’s happening in the Toronto housing market?
Sales are up, listings are up, mortgage rates are down, and there’s a slight relief for buyers with some lower home prices in some areas of the GTA.
The GTA remains a treacherous sales environment for buyers and sellers, but mostly for buyers. Buyers wonder if they should buy now or wait till spring. The overwhelming opinion on mortgage rates is they are heading down, perhaps by the magical 2% where buyers and sellers feel they could go ahead and buy a Toronto condo or house. Realtors will be readying. That’s next year though.
While sales almost maintained their pace in July, prices are beginning to slide. The Toronto condo market will likely see some panic selling this fall. Because recoveries don’t happen instantly. The eerie part of the marketing report is that big cracks are appearing as real estate companies begin to slide into bankruptcy and homeowners are under big pressure as they face big refinancing costs in the next 20 months.
-2%, The Magical Number
While mortgage rates are expected to fall 2% by the end of 2025, it may not be enough for some mortgage holders. Economists may not see a Canadian recession, but as lower interest rates kick in over the next 6 months, why wouldn’t we see inflation creep back up? There is uncertainty in all markets including the real estate and stock markets. The US elections on Nov 8th pose big concerns all round.
As you’ll read below, the forecast for Toronto is flat house and condo prices until late fall where some believe prices could rocket.
During July, TRREB reported 5,391 home sales through its MLS® System, up 3.3% versus 5,220 sales reported in July 2023. New home listings grew 18.5% year over year in July to 16,296 units.
The question is will the housing market collapse even as interest rates decline? And what if US rates don’t fall, or climbs in late fall as inflation resurges? Currently, first time home buyers are jumping in with loans from parents and relatives. And homeowners still hang onto homes hoping rates will fall quickly to a point they can afford.
Two Bank of Canada interest rate cuts this summer, followed by more expected cuts combined with more housing inventory has resulted in increasing home sales. There’s more optimism about the outlook now. TRREB President Jennifer Pearce forecasts sales will grow this fall as mortgage rates continue to fall.
TRREB’s Chief market economist Jason Mercer predicts sales will flatten initially until more inventory is absorbed this fall, but given home completions are declining, additional buyer demand will eventually raise home prices.
Of course the financing requirements for buyers is tough, so they may wait until spring 2025 to make their offers.
Canadian and Ontario Economy Improving
Economic indicators supporting the economy and home sales include rising GDP, rising employment growth, falling unemployment and inflation, and of course falling mortgage rates.
Falling house prices could encourage some sellers to put their home on the market. However, the locked-in mortgage rate effect is far from over as there are many factors causing homeowners to keep the status quo, namely economic uncertainty and the fall and winter season ahead.
With many homeowners possessing mortgages near 3%, it will be some time before they can refinance at a similar rate. Reports are that there is a surge in mortgage refinancing going on, however, those who are refinancing are likely to suffer financially given the expected rise monthly mortgage payments.
A good portion of mortgagees will be refinancing their home loans in 2025.
The CMHC in its recent report says Canadians are experiencing severe financial distress and most of their monthly debt is mortgage debt. The longer interest rates stay high, the more homeowners will succumb to their debt loads. They say many of them are using up their savings to stay afloat. They add that 25% of mortgagees are concerned about their ability to make their mortgage payments.
Many have resorted to Helocs, credit cards, and are changing their spending behaviours. A small percentage increase in 90 day overdue mortgage payments show financial stress is real.
While many in the Toronto housing market hope for lower rates, high home prices and mortgage qualification rules (debt to income) vs requested mortgage will make purchasing a tough prospect.
36% of first time homebuyers in Ontario as reported by CIBC economists, are getting financial help to cover their down payments. That “gift” is $128,000 in Ontario and is up 52% in the last 5 years. It suggests the market is dependent on young buyers borrowing money from the bank of mom and dad. As Gen X or baby boomer parents transfer wealth to younger generations, it may add to rising home price pressures.
Toronto Condo Market Under Pressure
The Toronto condo market is the bigger story this summer. Condo prices fell 5.7% year over year in the 905 area code and down .5% in the 416 area code.
TRREB reports that 17,400 condo apartment rentals reported through its MLS® System in Q2 2024. That was an increase of 25.2% versus the 13,896 rentals listed in Q2 2023. The average rent for a 1-bedroom condo apartment fell 3.1% to $2,452 monthly in Q2 2024, from $2,529 in Q2 2023. The average 2-bedroom unit rent fell 1.9% to $3,178 in Q2 2024 compared to $3,239 in Q2 2023.
Investors are being hit with losses as condo rents decrease against persistent high mortgage costs. Many face selling their units at substantial losses. Mortgage delinquencies have doubled year over year, the highest rate in 8 years. This makes investments in Toronto condos a risky and money losing proposition.
According to one report, Canadian real estate companies are going bankrupt in high numbers, up 57% from 2023, on track to include 240 companies. And this is 13% higher than during the 2009 financial crisis, making it very newsworthy.
Urbanation and CIBC reported that 77% of Toronto investors who secured a mortgage on a new condo last year are losing money on it. The average monthly loss is a staggering $597. Benjamin Tal says this is the biggest test of the Toronto condo market since 1991.
Toronto renters are a big component of the condo market and rent prices have fallen 3.1% in Q2 of 2024. It’s a bad situation condo developers want little part of. Condo prices are down 12% from two years ago where they peaked.
It’s an odd situation in a marketplace described as a “housing shortage crisis.”
It’s a crisis of living space too. Another issue is in demand for more space, as young buyers don’t want the micro-sized condos builder/investors have created. Millennials in particular have little use for small condos as they marry and begin raising families. They want larger sized units, which haven’t been built. Surveys show almost half of rentals are too small for the people inhabiting them.
The average price of 2 to 3 bedroom apartments in Toronto ranges from $800,000 to $1.2 million dollars, prices which neither investors or renters can still afford.
The key question for real estate investors is what is preventing the Toronto condo market from collapsing?
It may be that investor owners are willing to keep making payments and refusing to sell at a loss. And with rates falling slightly, they may be willing to hold fort, with expectations that their fortunes will reverse in 2025. But will rent prices drop even further in the next few months resulting in a cascade condo sell off?
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GTA Home Prices
TRREB’s sales and price chart a strong price drop in the 905 area code and a surge in townhouse sales in the 416 zone.
GTA City by city home prices (data courtesy of TRREB)
As the single detached home price chart for the GTA region below reveals, price rises for single detached homes have been steepest in Burlington, Halton Hills, Toronto West, and King. Over the previous 7 years, home prices have increased the most in Aurora, Milton, Ajax, Oshawa, Whitby, Innisfil, and Uxbridge. Given availability limits, these communities might once again see price surges in 2025/2026.
| Toronto Region Cities | July 2024 | February 2024 | May 2023 | August 2017 | Price Change last 8 Months |
Price Change Past 7 years
|
| Burlington | $1,590,391 | $1,422,500 | $1,495,300 | $944,564 | 11% | 41% |
| Halton Hills | $1,311,179 | $1,141,000 | $1,265,500 | $984,812 | 13% | 25% |
| Milton | $1,323,960 | $1,299,900 | $1,325,000 | $866,650 | 2% | 35% |
| Oakville | $1,323,960 | $1,299,900 | $1,870,000 | $1,314,363 | 2% | 1% |
| Brampton | $1,167,169 | $1,229,519 | $1,281,000 | $766,831 | -5% | 34% |
| Caledon | $1,167,169 | $1,457,751 | $1,455,000 | $1,028,591 | -25% | 12% |
| Mississauga | $1,589,373 | $1,395,000 | $1,480,000 | $1,066,015 | 12% | 33% |
| Toronto West | $1,457,154 | $1,250,500 | $1,350,000 | $919,916 | 14% | 37% |
| Toronto Central | $2,500,771 | $2,215,000 | $2,400,000 | $2,113,130 | 11% | 16% |
| Toronto East | $1,230,479 | $1,195,000 | $1,247,000 | $887,620 | 3% | 28% |
| Aurora | $1,790,483 | $1,607,500 | $1,550,000 | $1,144,094 | 10% | 36% |
| E Gwillimbury | $1,367,586 | $1,410,000 | $1,245,000 | $966,047 | -3% | 29% |
| Georgina | $861,465 | $948,000 | $900,000 | $604,838 | -10% | 30% |
| King | $2,573,088 | $1,953,000 | $2,000,000 | $1,768,333 | 24% | 31% |
| Markham | $1,810,025 | $1,629,000 | $1,788,000 | $1,319,860 | 10% | 27% |
| Newmarket | $1,280,657 | $1,385,000 | $1,355,000 | $901,055 | -8% | 30% |
| Richmond Hill | $1,905,989 | $1,817,000 | $1,840,000 | $1,466,884 | 5% | 23% |
| Vaughan | $1,813,500 | $1,620,000 | $1,725,000 | $1,348,649 | 11% | 26% |
| Stouffville | $1,467,685 | $1,438,000 | $1,395,000 | $1,024,941 | 2% | 30% |
| Ajax | $1,099,099 | $1,097,500 | $1,120,000 | $708,185 | 0% | 36% |
| Brock | $685,792 | $779,000 | $747,450 | $508,615 | -14% | 26% |
| Oshawa | $862,525 | $850,000 | $861,000 | $550,677 | 1% | 36% |
| Pickering | $1,171,175 | $1,190,000 | $1,280,000 | $812,643 | -2% | 31% |
| Scugog | $1,106,943 | $962,500 | $945,000 | $719,375 | 13% | 35% |
| Uxbridge | $1,516,851 | $1,300,000 | $1,350,000 | $792,233 | 14% | 48% |
| Whitby | $1,115,330 | $1,100,000 | $1,161,000 | $733,811 | 1% | 34% |
| Orangeville | $853,553 | $827,500 | $890,000 | $612,974 | 3% | 28% |
| Bradford | $1,341,632 | $1,145,000 | $1,180,000 | 15% | N/A | |
| Innisfil | $857,088 | $820,000 | $900,000 | $549,492 | 4% | 36% |
Toronto Housing Predictions
Most banks, real estate brokerage brands and MLS associations won’t offer any kind of firm, certain projection of home sales and prices. And when they do, they’re quickly revised based on whatever happens in the economy. What they’re hoping from their housing market experts is a confident view of all political, BofC, and supply/demand factors taken into account.
Experts predictions have been for a recovery of home sales for sometime, but the timeline of the recovery has kept sliding into the future, due to government’s inability to contain stimulus spending and bring down inflation. Even now, inflation is an issue in the Metro Toronto area. However, the economy has cooled, and may be prepared for a lift in 2025.
Realtors should be preparing now for a strong market in 2025. A big growth in listings combined with price moderation and lower mortgage rates should spawn a big jump in home sales. For Millennials, buying a home is an urgent matter, and they’ll gladly sign a 5 year mortgage to buy one. Just the easing of mortgage rates is a catalyst for them.
Prices have topped off as the economy has slowed, but what might happen when rates sink 1% in 2025 to perhaps 2% by spring of 2026?
In its 2024 Canadian housing market forecast report, REMAX predicts Toronto area home prices will decline by 3% by year end. Back in April, Phil Soper and Royal Lepage made a bold projection of home prices, to rise 8% in the 4th quarter, 2024. Phil commented that the driver of rising prices is a continuous shortage, and that more listings won’t solve demand.
TD Economics continues to paint a bleak outlook for home sales across the country and we’d assume for Toronto as well. They foresee home prices increasing by 10% by the end of 2024. That would suggest they see a rush of buyers buoyed by continuous BofC rate cuts.
CMHC Housing Forecast for Toronto
CMHC forecasts a decline in housing starts for both 2024 and 2025 due to high construction costs. This should sink supply at a time when buyer demand is increasing. It means sellers might try to hold off until house prices peak in 2025/2026. A condo glut and market mismatch with buyers, should see condo price. They project an increase in prices.
Bookmark this page for updates as forecasters make announcements and MLS’s release data.
