The Toronto Real Estate Stage is Set for a Showstopping Spring
Anticipated rate cuts and pent-up demand to spark a busier-than-usual spring market
The past two months have felt somewhat like a preview of spring. Far earlier in the year than what we are accustomed to, our phones started ringing, texts pinging and inboxes filling, with inquiries from clients, old and new, eager to dip their toe in the waters, so to speak, and get a temperature check on the upcoming market.
January and the first half of February, in fact, felt like a dress rehearsal for what is no doubt poised to be a very active spring market – the official start of which is April 2nd. At Heaps Estrin, we saw an uptick in listings, fewer days on market, and more offers than what we had been witnessing in the preceding year. Much of this renewed activity, of course, has hinged upon anticipated interest rate cuts, and adjusted expectations borne out of homebuyers having come to terms with the increased cost of borrowing.
POSITIVE TRENDS PUNCTUATED BY FLUCTUATIONS
The numbers just released by TRREB attest to the market’s ongoing recovery. Listings in the GTA were up 33.5 percent in February as compared with the year before, and sales were up 17.9 percent (though one extra day in the month contributed marginally to this figure). However, on a seasonally adjusted basis, sales were actually slightly lower in February than in January, which represented the first downward shift in some time and was in sharp contrast to the double-digit growth we had seen in the two consecutive months prior. The modest decline comes as no surprise, though, as monthly figures can fluctuate as the market approaches a turning point.
As well, while the latest inflation numbers reflect good news for the economy, reports just a month earlier were not as optimistic, which likely contributed to the temporary slowdown as there is always a lag between market changes and buyer and seller activity.
SLOW AND STEADY WINS THE RACE
This dance of good news interspersed with occasional dips, however, can often be a signal of a steady and solid recovery that is more reliable and robust in the long run, as compared with a market resurgence that spikes upward at breakneck speeds. Ultimately, the expectation remains that the market is indeed recovering, the economy will see improvements, but it may not be a perpetually upward trajectory.
As for the immediate future, we expect that the remainder of March will be relatively calm as historically our industry experiences a quieter period over March Break ahead of the busyness of spring.
“As we move through 2024, an increasing number of buyers will re-enter the market with adjusted housing preferences to account for higher borrowing costs. In the second half of the year, lower interest rates will further boost demand for ownership housing.”
– Jason Mercer, TREBB
INTEREST RATE SPECULATION SPURS ACTIVITY
In addition to the busy preview season earlier this year, there are several indications that April will bring with it a resurgence of activity and the positive trends will resume. While the Bank of Canada’s announcement this week saw interest rates once again holding steady, a decrease is expected around the mid-year mark but could come as early as the April 10 announcement.
The recent cooling of inflation to 2.9% is another good news story, but the Bank of Canada may wish to see it remain under the all-important three percent benchmark for a little longer before moving ahead with the cuts to key interest. Either way – whether they are announced in April or closer to the mid-year mark – even just the anticipation of those cuts will likely set the stage for single-digit price appreciation later this year.
CENTRAL TORONTO
Central Toronto experienced positive movement across a number of categories last month, especially semi-detached inventory, sales of which were up by 13% over the same period last year. Average sale prices were up slightly for both detached and semi-detached properties, while condos saw a 1% decrease in price. Overall, though, despite the modest slowdown brought on by the inflation rate stories of a month earlier (which, again, have since changed course) the news is considerably positive and likely just the beginning of more good things to come.
In the meantime, we are looking forward to much more incredible inventory coming to market in early April and all of the wonderful opportunities to connect with you, our beloved community, that the busy spring market will bring. Until then, if you have questions about the opportunities that 2024 may have in store, we would love to hear from you.
