Will Ontario see any home price relief this year?

The province's housing market remains one of Canada’s priciest

Will Ontario see any home price relief this year?

It goes without saying that Ontario homebuyers could do with catching a break on the home price front, with affordability out of reach for many despite a climbdown in values last year. But is any relief likely to arrive in 2024?

The most comprehensive measure of annual average prices across the province dipped by 6.3% last year over the 12 months prior, according to the Ontario Real Estate Association (OREA), coming in at $872,312.

Still, the regional real estate board for Toronto – by far Ontario’s hottest housing market – said average home prices in the city jumped 3.2% in December compared with the same time last year, tipping above $1.08 million, with a further rebound expected in the year ahead.

John Lusink (pictured top), president at Right at Home Realty in Toronto, told Canadian Mortgage Professional that the company had noted a striking trend in last year’s real estate market, having tracked almost 120,000 transactions in Ontario over the past six years.

“Prior to the last two years, price appreciation hit 45%. We’ve seen it drop down now – our five-year price change is 29%,” he said. “In 2023, it was the first time at Right at Home we actually saw a drop in our average price, by 7.95%.”

Whether home prices will start to tick up again in 2024 depends on the market, Lusink added, with the Greater Toronto Area (GTA) likely to record a stronger recovery than other parts of the province – and different property types set to have a greater impact than others.

“I do see the GTA as being something of an outlier,” he said. “We already saw a slight bump in TRREB [Toronto Regional Real Estate Board] reported stats, but I think we’ll see maybe a 5-7% increase across the board on average.”

Certain high-demand areas of Toronto such as Leaside and Bloor West Village are likely to see the strongest price growth in the detached home segment, Lusink said – “but the condo market’s a whole other discussion. So that will pull the overall average down.”

Where are home prices headed this year?

Home resales across Ontario rebounded noticeably at the end of the year, RBC Economics said, driven by a big Toronto surge and strong performances in London-St. Thomas, Ottawa, Brantford, Cambridge, North Bay, and Kitchener-Waterloo.

However, that spike took place from “historically weak levels,” the bank noted, with prices continuing to trend lower for now amid a soft market. “The tightening in demand-supply conditions in December would need to be sustained for several more months in order for prices to change course,” assistant chief economist Robert Hogue and economist Rachel Battaglia wrote.

Royal LePage, meanwhile, forecasts a gloomier outlook for buyers in the Toronto market in 2024, with the city expected to trail only Calgary in price appreciation this year. Prices are anticipated to post a 6% jump in the 12 months ahead, the company has predicted, and climb to an average of nearly $1.2 million.

Lusink said that’s likely to mean no letup in the continuing struggles of first-time homebuyers hoping to afford a property in the city’s eyewatering housing market.

“Short of getting back to the interest rates of 1% or whatever they were, I just don’t see it. There’s not a lot of relief for first-time homebuyers,” he said.

How will inventory challenges affect Ontario’s housing market?

Supply also continues to represent a chronic issue across the province, although a recent increase has proved helpful for the home price outlook, according to Lusink.

“On the Right at Home side, we track our listings daily, and certainly for the last year we’ve been at 2,000 and up as high as 3,000 on a regular basis,” he said. “That’s across the board – from Ottawa up through Barrie over to Niagara. So it’s a broad area.

“Do I see this making a bit of a difference? I think there’s a stabilization in pricing happening because of the listing inventory.”

That said, part of that increase has also been skewed somewhat by condo listings rising 30% over the previous year, Lusink said, with single-family inventory only up by around 5% – too modest an increase to make a noticeable impact on the inventory side.

“I don’t see supply coming on in the way that we need to, for example, to help that first-time group,” he said. “Certainly, it’s not going to be enough to sway from a strong seller’s market to a strong buyer’s market.”