In May 2024, the GTA market saw 7,013 home sales, a 21.7% drop from the previous year. Keep in mind, there was a spike in activity last May before the rate hikes in June and July that slowed the market down.
The average selling price was $1,165,691, down 2.5% from last May. Despite high interest rates, prices slightly increased from April 2024.
New listings increased by 21.1% year-over-year, reaching 18,612. The Month of Inventory is now at 3.1 for all houses, and 2.7 for low rise.
Investors are leaving the condo market
In May, there are 8,183 active condo listings in GTA, the highest number of units for sale for any month in recent history.
The condo market remains a buyer’s market. There is an influx of supply from investors selling their condos, while there is a lack of first-time and condo buyers. We now have almost 5 Months of Inventory for condo apartments.
Investors are rushing to sell their properties. The current rent is simply not enough to cover the average investor’s mortgage, taxes, and maintenance fees. High interest rates, declining rents, and record condo completions scheduled for the coming year are concerns for investors.
Additionally, the federal government’s plan to reduce the number of non-permanent residents in Canada and the increasing of the share of capital gains that is taxable from 50% to 66.7% for corporations and individuals on gains above $250k has made investors less optimistic about future price growth for Toronto condos.
Bank of Canada reduced rates to 4.75% from 5%
On June 5, the Bank of Canada dropped interest rates by 0.25% for the first time in 4 years to 4.75%. This could be a signal to bring some buyers that are on the sidelines to get back into the market.
While the rate drop doesn’t drastically change buyer’s mortgage qualifications amounts or increase affordability, it gives buyers who are qualified to have confidence in the direction of where lending policies are moving towards.
The Bank of Canada is scheduled to make its next decision on interest rates on July 24. If rates continue to drop, we can expect more buyers entering the market and an upward pressure on prices to follow.
Choose Variable or Fixed?
The current expectation is that the BoC will cut rates by 1.50% to 2.00% over the next 18 months. If variable rates drop accordingly by the end of 2025, they should outperform today’s fixed-rate options.
For conservative borrowers, three-year fixed rates might be the best choice. One- and two-year fixed rates have high premiums, and while five-year fixed rates are low, locking in for five years is risky with rates at their highest in over three decades.
Need personalized suggestions? Send me a text at 647-504-0690, I will get you in touch with some of the best mortgage brokers who can guide you based on your situation.
Market Outlook
While interest rates remained high in May, buyers benefited from slightly lower selling prices than last year. If the BoC continues to cut rates, affordability should improve. Another rate cut soon could boost buyer confidence, leading to increased competition and upward pressure on prices.
Though condo prices have been flat with a slight downward trend, it’s important to watch inventory levels and market prices closely. Time will tell if prices stay steady or if we see more downward pressure. First time buyers might have a great opportunity to get in during this buyer’s market with many condo listings to choose from and negotiation power.
There are always opportunities in this market if you know where to look. Let’s explore your options and find the best deals.
If you’re thinking of moving, this might be a good time to start planning before prices start climbing again. Let me help you to achieve your real estate goals.
Email or call us to get insights on your neighbourhood stats or an up-to-date appraisal of your home.
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📧 Email: steven@mistersauga.ca
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