What's next for Toronto's housing market?

Real estate board reacts to latest data

What's next for Toronto's housing market?

Toronto home sales fell in June despite the Bank of Canada's interest rate cut earlier in the month.

The rate cut was not enough to spur buyers into action amid a well-supplied market, according to the Toronto Regional Real Estate Board (TRREB).

TRREB reported 6,213 home sales through its MLS System in June 2024, a 16.4% decrease from the 7,429 sales recorded in June 2023. This decline comes as a surprise to many industry watchers who had anticipated a surge in market activity following the central bank's decision to lower interest rates at the beginning of the month.

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“The Bank of Canada’s rate cut last month provided some initial relief for homeowners and home buyers,” TREB president Jennifer Pierce said in the report. “However, the June sales result suggests that most home buyers will require multiple rate cuts before they move off the sidelines. This follows Ipsos polling for TRREB, which suggested that cumulative rate cuts of 100 basis points or more are required to boost home sales by any significant amount.”

While sales numbers have dipped, the supply side of the equation tells a different story. New listings surged by 12.3% year-over-year, with 17,964 properties entering the market in June. This influx of inventory has created a well-supplied market, shifting the balance of power towards buyers and putting downward pressure on prices.

The average selling price in June 2024 stood at $1,162,167, representing a 1.6% decrease from the $1,181,002 recorded in June 2023. Similarly, the MLS Home Price Index Composite benchmark saw a 4.6% year-over-year decline.

Read next: What's happening to home sales in Hamilton?

However, it's not all doom and gloom. On a seasonally adjusted monthly basis, both the MLS HPI Composite and the average selling price showed signs of recovery compared to May 2024.

“The GTA housing market is currently well-supplied,” said Jason Mercer, chief market analyst for TRREB. “Recent home buyers have benefitted from substantial choice and therefore negotiating power on price. Moving forward, as sales pick up alongside lower borrowing costs, elevated inventory levels will help mitigate against a quick run-up in selling prices.”

TRREB chief executive John DiMichele emphasized the ongoing demand driven by population growth: "We know that strong population growth is driving long-term demand for ownership and rental housing. Ontario has set the goal of 1.5 million more homes on the ground by 2031."

Achieving this ambitious target, however, will require concerted effort from all levels of government.

DiMichele called for "actionable solutions with sustained effort, including continuing to remove red tape, avoiding financial barriers to home construction, and minimizing housing taxes and development charges."

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