Warming Trends Signal a Hot Spring Market in the Toronto Real Estate Forecast:
The promise of lower interest rates and higher consumer confidence are likely predictors of an early spring market. It may be February, but it’s safe to say that the real estate market shows no signs of behaving like Groundhog Day any time soon.
With a challenging year behind us, rather than living out the same experience day-after-day, all signs now point to change – change of a positive kind. TRREB just released its January statistics and while we are still experiencing some mild aftershocks from recent economic corrections, such as a dip in GTA house prices for the sixth month in a row, there is much to suggest that these repercussions will be short-lived.
Recent buyer activity is steadily on the rise, as evidenced by the 9.6% increase in the number of transactions between December and January, for example. Anecdotally, too, our team members and many of our colleagues are reporting much higher foot traffic at open houses and several more showings than what they were experiencing mere months ago.
And while we are not necessarily gearing up for the bidding wars of the 2022 market peak, we have seen the return of multiple offers recently, resulting in many sale prices coming in over asking. Recent examples include a home on Douglas Drive in Rosedale, which sold over asking in just one day, and a Bennington Heights property that sold off-market with multiple offers, also within 24 hours.
Welcome Speculation Spurs Activity
Much of the market activity (or last year’s lack thereof) has of course hinged on the all-important prime lending rate. In its most recent announcement, and for the fourth consecutive time, the Bank of Canada once again held steady.
Consensus among economists and industry insiders is that we can expect to see not just an end to the increases of 2023, but an interest rate cut sometime around the year’s halfway mark (with perhaps more to follow). This kind of welcome speculation is already taking effect, translating into buoyed consumer confidence, and creating a more balanced climate where buyer and seller sentiment is more closely aligned.
“Once the Bank of Canada actually starts cutting its policy rate, likely in the second half of 2024, expect home sales to pick up even further,” says Jason Mercer, the Toronto real estate board’s chief market analyst. “There will be more competition between buyers in 2024 as demand picks up and the supply of listings remains constrained. The end result will be upward pressure on selling prices over the next two years.”
In addition to its monthly stats, yesterday TRREB also issued its 2024 Market Outlook and Year in Review. Key takeaways included a projection of 77,000 transactions between now and year-end – a substantial improvement over last year – and average prices are expected to rise to the second-highest level we have seen, although still slightly lower than those of 2022 heights.
So, while house prices throughout the GTA may not have gained momentum just yet, as demand continues to be stoked by the burgeoning increase in consumer confidence, prices, too, will almost certainly follow suit.
Central Toronto Sees an Even Earlier Spring
What is perhaps most notable so far year this year is that the uptick in buyer interest seems to have arrived earlier than what we normally see. In addition to returning consumer confidence, this can likely be attributed to the pent-up demand that was being harboured by prospective buyers and sellers who took a wait-and-see approach while the market shifted and settled.
As the temperatures begin to rise in the coming weeks, and if the cost of borrowing does indeed
decrease as expected, there is every reason to believe that we will see a stronger and earlier
spring market than usual.
As with all sets of market conditions, there is a great deal of variability from one neighbourhood to the next. In Central Toronto, for instance, year-over-year sale prices have already demonstrated healthy signs of a market rebound with semi-detached home prices up by 9%, and detached home prices increasing by 17%, as compared with the same period last year.
As we have discussed in previous updates, the core of the city was not impacted by the market adjustments to the degree that other areas were affected. This will likely mean that the effects of the market rebound will be even stronger in this micro-market of Toronto, and, as the trends seem to be indicating, they will likely be felt even sooner.
Opportunity Knocks
As we ready ourselves for what promises to be one of busiest times of year, we are having conversations with our clients about the opportunities to consider today. For example, the early part of the spring market will present very favourable conditions for sellers. Those who list before inventory rises to meet increasing demand, will inevitably be met with greater interest.
As for buyers, we can also suggest sound strategies that will stand them in good stead to compete with others seeking similar inventory in what – for now – remains a relatively scarce market.
It is at times like this, when conditions can change on a dime, that aligning oneself with an experienced ally matters most. Our team has navigated every conceivable set of market conditions and often oversees dozens of transactions per week, not just one or two per month.
This kind of experience means that we are well-equipped to not only guide you through challenging times like the ones we’ve just seen, but can set you up for success in any iteration of our fast-paced and dynamic market, whether it is said to favour buyers, sellers, or is more of an equal opportunity player at the time, and regardless of what side of the fence you’re standing on.
If you have questions about your home, your neighbourhood, or the way the market is performing and how to strategize accordingly, we would love to hear from you.
