Current Market Conditions

The Toronto real estate market is experiencing a shift after years of rapid growth. Although prices have softened from their peak levels, the market remains competitive due to the city’s strong appeal as a top destination in Canada. The pace of home sales has slowed, but Toronto’s housing market is showing signs of resilience, supported by continued population growth, high levels of immigration, and an overall stable economy. Affordability has become a key focus for many buyers, but demand remains strong in sought-after neighborhoods, where competition for well-located properties is still fierce.

Demand and Interest Rates

With inflation falling below the 2% target, the Bank of Canada’s just announced on Oct 23rd 2024, a jumbo-sized interest rate decrease of 0.5% bringing the overall drop to 1.25%. For example, 1% of interest on your typically $1M mortgage would be $10,000 less expensive per year. As rates continue to fall, buyer affordability increases and could reignite much enthusiasm for prospective buyers waiting on the sidelines. In addition, the Canadian government has introduced a policy to extend amortization periods for non-insured mortgages up to $1.5 million from 25 years to 30 years, starting on December 15th, 2024. This move is expected to ease monthly mortgage payments and make homeownership more attainable, particularly for first-time buyers.

Supply of Homes

In terms of supply, the Toronto market has seen an increase in the availability of homes, particularly in the condominium segment. This provides more options for buyers and more room for negotiating. Much of the new supply has come from homeowners who bought during the pandemic and are now feeling the pressure of higher interest rates. These additional listings have given buyers more choices, but prices have yet to drop significantly.

Market Outlook

Looking forward, the possibility of further interest rate cuts could encourage more buyers to return to the market. With inflation under control and the real estate market showing signs of balance between supply and demand, Toronto may be entering a more sustainable phase of growth. Though the market has stabilized, affordability remains a challenge, particularly for first-time buyers.

The good news is that prices have leveled off, and with interest rates expected to decrease further in, Toronto real estate could become more accessible. The Bank of Canada is aiming for a “soft landing,” meaning gradual economic adjustments without severe disruptions. If successful, this approach could make homeownership in Toronto not only affordable but a solid long-term investment opportunity.