The real estate Toronto market seems to be in for a couple of surprises in 2024. We decided to discuss them with skilled De Krupe Law Toronto real estate lawyers. They gave us valuable advice based on the latest data, so we are here to share it with you! 

Quick Summary

In the summer of 2023, national real estate sales staggered slightly, falling 1.5% from the previous month. This decline is less than the drop we saw in April and May, and sales activity was 4.7% lower than in June 2022. The number of new offerings on the market was down 5.9% for the month.

And what about prices? The MLS Home Price Index (HPI) fell 2% from the previous month and is 4.5% below year-ago levels. The national average sales price fell 6.7% year-over-year. RBC remains positive about the situation: “We estimate that more homes became available for sale in every major market last month.” This is also confirmed by real estate lawyers Toronto.

What’s Going On?

If you’re asking yourself what’s going on in the Toronto real estate market, we’ll break it down in plain language:

• Canadian real estate sales are down in June 2023. It’s a slight drop, but it looks like the growth rate may slow down soon too;
• Despite the overall decline in sales, new offerings on the market have increased. This may indicate that the market is starting to recover after a period of high activity;
• The MLS Home Price Index (HPI) fell but is still 4.5% below year-ago levels, showing that the market is still under pressure despite some growth;
• New supply is outpacing sales, so the sales ratio to new supply has fallen. It seems promising since it brings more balance to the real estate market;
• Inventory levels were 3.1 months at the end of June 2023. Their stagnation means that the market continues to adapt and recover.

Despite the recent hype over raised interest rates, the real estate market in Canada will remain stable and will continue to evolve further. 

Latest News

Let’s take a closer look at what’s in store for us in the Toronto real estate market and what to expect:

Home price decline

Based on current data and trends, a moderate decline in home prices is expected over the 2022-2023 timeframe. We estimate that this decline will reach its lowest point in 2023. However, it is worth noting that despite the decline, the average home price will not return to pre-pandemic levels. This could mean that buyers can expect a decline in home values, representing an excellent opportunity to enter the market.

Rising prices, sales, and construction starts

Despite the current decline, long-term growth is expected. Prices, sales, and construction starts are projected to increase between 2023-24 and 2024-25. It means that while the market may be under pressure currently, it is likely to recover and grow.

Jump in buying competition

New construction will decrease in 2023 and remain well below recent levels. This can be attributed to a number of factors, including: 

• Increased construction costs; 
• Difficulty in obtaining building permits;
• General economic uncertainty. 

This could mean fewer new homes will be built, increasing competition among buyers and increasing prices for existing homes.

Deteriorating housing affordability

Housing affordability is becoming increasingly problematic due to rising mortgage rates and limited supply. Consequently, it influences rental housing as more people are forced to forego buying their own homes and pressures the rental market, increasing demand and rental costs.

Increased competition in the rental market

More people choose not to buy and just rent instead, so the rental market becomes more and more competitive. We expect tangible increases in rental costs, especially in the city’s most popular areas.

Toronto Real Estate Market Forecasts

Ultimately, the forecasts for the market point to a period of correction and stabilization after significant growth in previous years. This will have important implications for buyers, sellers, and real estate lawyers in Toronto who must adapt. 

The Toronto real estate market has demonstrated resilience and growth over the past few years, but you still need to approach the possible real estate deals with caution. Factors like economic trends, government policies, and global events can significantly impact market dynamics. 

Economic Indicators

No one can predict economic fluctuations with 100% certainty. However, we do see indications of continuing growth in the Toronto economy. Low interest rates and more employment opportunities could drive demand for real estate in the future.

Supply and Demand Dynamics

Toronto has experienced a housing supply shortage in recent years, which has put upward pressure on property prices. In 2023-2024, we may see a gradual increase in housing inventory as developers respond to the demand. However, the pace of new construction must keep up with population growth and housing needs to maintain market stability.

Government Regulations

Government policies play a big role in shaping the real estate market too. The authorities may continue to implement measures to control speculative activities and promote housing affordability. Stay informed about any new regulations that could impact your real estate transactions.

Market Segmentation

Toronto is a diverse and dynamic city, and its real estate market reflects this diversity very well. Different neighborhoods and property types may experience varying levels of demand and price appreciation. You need to understand the characteristics of different areas and property classes when making real estate decisions. Or you can always contact skilled De Krupe Law Toronto real estate lawyers to get expert answers and strategies.

Impact of Pandemic Recovery

The COVID-19 pandemic had a huge impact on real estate dynamics. As the economy is recovering bit by bit and businesses go back to normal ways, we may see a shift in demand patterns. This includes a potential spike in commercial real estate transactions.

External Influences

Global events and geopolitical factors can influence investor sentiment and foreign investment in the Canadian real estate market. As these factors remain unpredictable, it is prudent to monitor their potential impact on Toronto’s property market.

While the real estate toronto market has shown resilience and growth historically, the future landscape is subject to various dynamic factors. As always, we, at De Krupe Law, encourage open communication and welcome any inquiries you may have regarding your real estate transactions or legal matters. Together, we can make informed decisions that align with your goals and protect your interests.

Real Estate Lawyers Toronto Opinions

In the long term, the real estate market will continue to adapt to changing economic conditions and demographic trends. This will mean the following for various market participants:

• Toronto home buyers may face higher prices and competition, especially in popular areas of the city. But at the same time, they may have more choices because of the increased supply in the market;
• Sellers may face less buyer activity due to higher rates and buyer caution. However, sellers may also be able to capitalize on the opportunities presented by rising prices in the long run;
• For realtors, changes in the market may bring new challenges and opportunities. They may face more complex transactions and the requirement to be more diligent in property valuations and transactions;
• Real estate investors may face a more complex situation as they must consider a broader range of factors, including regulatory changes, mortgage rates, and demographic trends.

Despite some challenges, the Toronto real estate market is expected to continue growing and developing in the coming years. This will support housing demand and supply while market participants look for new and innovative ways to adapt to changing conditions.

Real Estate Toronto Market FAQs