Toronto Real Estate Market Update: Fall 2024 Recap and 2025 Predictions
The Toronto real estate market has seen a strong rebound this fall, signaling a promising period for both buyers and investors. A blend of favorable interest rates and stabilizing property values has attracted many buyers back into the market, creating a noticeable surge in transactions. The latest data from the Toronto Regional Real Estate Board (TRREB) shows a 44.4% year-over-year increase in sales for October 2024, with 6,658 homes changing hands. This increase marks one of the most significant shifts in market activity Toronto has seen recently, setting a foundation for continued growth.
Key Market Highlights from Fall 2024
1. Increased Sales Volume
The year-over-year growth in sales has been driven by recent rate cuts by the Bank of Canada, which is anticipated to continue its easing cycle. Buyers who had previously hesitated due to high borrowing costs are now re-entering the market, capitalizing on improved affordability. This resurgence in activity points to an optimistic outlook for both residential and investment properties, especially as expectations grow around another potential 0.50 basis point rate reduction in December.
2. Slow but Steady Price Growth
While sales have surged, price increases remain modest. The average selling price in Toronto rose to $1,135,215, representing a slight 1.1% increase year-over-year. This steadiness in pricing suggests a balanced market where demand growth is being met by a gradual increase in supply, allowing for reasonable price stability. However, with new listings only up by 4.3% year-over-year, the supply growth has been much slower than the surge in sales, which could drive moderate price increases over the coming months.
3. Reduced Days on Market
Properties in Toronto are moving at a steady pace, averaging 27 days on the market. This turnover rate indicates strong buyer interest and suggests a healthy balance between inventory and demand. As more buyers re-enter the market, this trend of quick sales may continue into early 2025, especially if inventory does not keep pace with demand.
Predictions for Winter 2024 and Early 2025
1. Continued Rate Cuts to Fuel Demand
With another interest rate reduction expected in December, we anticipate sustained buyer activity into early 2025. Lower rates make borrowing more accessible, particularly for first-time buyers and investors, potentially driving demand further and tightening inventory levels. For investors, these conditions present an attractive opportunity to secure properties at steady prices while benefiting from lower financing costs.
2. Tightening Inventory May Drive Modest Price Gains
As demand continues to grow, the lag in new listings could result in slightly higher prices, especially in desirable neighborhoods where competition remains high. Although prices have remained relatively stable this fall, limited supply may lead to upward pressure on prices in early 2025. Buyers looking to enter the market should consider moving sooner rather than later to avoid the potential price increases in the coming months.
3. Government Policy and Affordability Measures
Government actions, such as potential tax relief for homeowners and buyers, could also play a role in shaping the market. These policy changes could improve affordability and stimulate further buyer interest, especially in the first half of 2025. Investors should stay informed about these developments, as they may influence market activity and create new investment opportunities.
Final Thoughts
The Toronto real estate market is poised for steady activity as we transition into winter and early 2025. While affordability is improving, the demand surge and modest supply growth suggest that buyers and investors may want to act sooner to take advantage of current conditions. With interest rates likely to drop further, Toronto's market remains a valuable investment landscape for the foreseeable future.