The Review · Vol 10/24 · September 2024
September shake-up: the market’s wild ride continues.
Written by Pawel Parafianowicz, Founder | Broker, Coral Realty Group ·
September brought a sense of optimism as many anticipated the market would gain momentum following three rate cuts and a slow summer. We certainly thought so, and the surge in new listings shows we weren’t alone.
However, real estate predictions are notoriously tricky, and September reminded us just how challenging it can be to forecast market movements. Our goal is to provide insight and context for what's unfolding. While we share our perspective, the market has been too volatile since the pandemic to offer any absolute answers.
With the recent 50 bps rate cut from the Bank of Canada, we expect that market activity will pick up, but likely not before spring 2025. Interestingly, we’ve already seen increased traffic at listings and more inquiries from clients in the latter half of October, which could signal a promising spring ahead.
Buyer's or seller's market?
5.5 months of inventory: an extreme buyer's market.
- Seller's under 2
- Balanced 2–3.5
- Buyer's 3.5–5
- Extreme buyer's 5+
Every September, months of inventory
New HST on short-term rentals
Recent tax court ruling now applies HST to short-term rentals like Airbnb
Affects investors operating short-term rentals in residential units, classifying them as "commercial activity"
Example: On a $1M property, HST could add a tax bill of up to $130,000
Likely impacts: Reduced short-term rental supply, more shifting to long-term rentals, affecting both rental and resale markets
Project cancellations on the rise
33 GTHA condo projects canceled, converted, placed in receivership since 2022
6,796 units removed from the market pipeline
Q3 2024: Three projects (1,111 units) converted to rental, eight (2,231 units) canceled or paused
Implications: Potential completion decline by 2027-2028, leading to higher sales prices, rent increases, and economic impacts in Ontario
Average price
The average home price has rebounded month-over-month, rising from $1,029,069 in August to $1,113,671 in September—an 8.2% increase that offsets the previous dip from July to August, bringing prices back in line with July’s levels. We saw a similar trend last year, with prices climbing from August to September, which is a positive indicator for the market. However, reaching this year’s peak price of $1,193,202 from May may not be in the cards for 2024. With the Bank of Canada’s recent 50 bps rate cut and further reductions anticipated, though, we expect the spring market to be especially active.
Average price
$1,113,671 ▼ −0.5% vs a year earlier ($1,119,452)
- 2024
- 2023
- 2022
Average price by type
HPI
The Home Price Index provides an apples to apples comparison of home prices in the city and reflects a more accurate change in prices. According to this metric Toronto home prices are down -5.16% (YoY), detached -3.58% (YoY), semi-detached -1.97% (YoY) and condos down -9.92% (YoY).
MLS® Home Price Index
Sales
Sales rose from August to September, but only in Toronto; surrounding areas like Durham, Peel, and York actually saw a decline. This contrast might seem surprising, yet it's not entirely uncommon. In fact, September closed with just 1,808 sales, which is 37% below the five-year average of 2,867 for this month. While average home prices did see an uptick, the lower sales volume could be a cautionary sign for the market.
Sales by type
New listings
New listings saw a significant boost, rising from 4,177 properties in August to 7,074 in September—a 69% increase, which is a bit higher than in recent post-pandemic years. Compared to last September’s 6,517 new listings, this year marks an 8.5% increase. For context, though, it’s worth noting that September 2022 had just 4,493 new listings, the lowest for any September since 2002!
New listings by type
Active listings
Active listings rose sharply due to both increased listing activity and slower sales. By the end of September, there were 10,022 active listings, up 16.2% from 8,625 in August—the highest count we've seen this year. Year-over-year, the increase is even more notable, with a 32.2% rise compared to the 7,580 active listings at the end of September 2023. If the pattern of lower sales and higher listings persists, we’re likely to see these numbers climb further through October and November. However, there are promising signs of market activity picking up in October; we've noticed increased traffic at listings and more calls from clients.
Homes for sale by type
The bigger picture
Homes sold every September, 1996 to 2024
Average condo apartment price, by year
Condo prices are back near 2023 levels.
Our thoughts
Now, as much as we’d love a crystal ball, we believe that a strong increase in market activity is on the horizon for spring next year. With more potential rate cuts expected as economic and employment challenges continue, buying conditions may become more attractive. The condo market is likely to be a key area to watch, as we suspect that when demand returns here, it could open the floodgates across the board.
As the market evolves, we’re keeping a close eye on these indicators, particularly the condo market, which we believe could ignite broader growth once demand rebounds.
Please reach out if you’d like to discuss how these trends may impact your buying, selling, or investing decisions. We’re here to help you navigate this unpredictable landscape and seize the opportunities ahead.
Buyers -> Now is the time to buy—prices have stabilized, and with rate cuts likely coming, a variable mortgage gives you the flexibility to lock in lower rates when they drop. Don’t wait and miss out on this sweet spot in the market.
Sellers -> For sellers, a custom approach is key in this market. We've had success using off-market strategies to test the waters before fully listing, which helped us sell a home in Etobicoke in less than a week for over asking, even in a tough market. This tailored method lets us gauge interest, generate buzz, and fine-tune our strategy for when it officially hits the market—maximizing your chances of a successful sale.
Investors -> With all the new development rule changes, Toronto is easier than ever for newer investors to dive in. Whether it’s adding secondary suites, laneway or garden suites, building additional levels, or redeveloping properties using the MLI Select program, the opportunities are endless. When structured correctly, your investment can offer several ways to add long-term value, while also giving you multiple exit strategies. We’re here to guide you through it all. First step? Let’s grab a coffee and discuss your goals to build a custom strategy.
Source: TRREB. Figures as published in September 2024's data, sent October 25, 2024. Market commentary is general information, not advice for your situation.