A Strong Fall Market In Toronto For The First Time Since 2021

The real estate market in Toronto has been on a vertiginous roller coaster ride since the beginning of Covid. High inflation triggered by massive government spending and supply chain disruptions led to steep interest rate increases in 2022. In turn, this caused extreme swings in the real estate market, with price fluctuations of up to +/- 10% from spring to fall over the next two years. This year, both inflation and interest rates have come back down, and the market is finally returning to something resembling a normal seasonal pattern.

Houses

House prices declined slightly in November versus October, but remained well above last year. While we will inevitably see a slowdown during the Christmas/New Years season in December and January, there is every reason to hope for a strong spring market next year. The Bank of Canada will very likely cut interest rates by at least another 0.25% in their December meeting, and that will almost certainly add to the spring momentum.

Sales of houses also remained strong in November, similar to October and well above the summer. This is more evidence of the underlying strength of the market and another harbinger of a strong spring in 2025.

Condo Apartments

While the condo market remains somewhat weak and is still clearly in a buyers’ market, signs of improvement are here also. Prices have recovered from the extreme low in August and have returned to the trend line established in 2023. However, interest rates have not yet fallen far enough to attract a lot of investors back to rental condos. Given that a very large proportion of condos are rental units, it will likely take more time for condos than for houses to return to ‘normal’ as interest rates come down.

Condo sales remain strong in November following a sharp increase in October. This is a strong sign that the condo market is on the mend, albeit slowly. With interest rates becoming less restrictive, and rental condos therefore more profitable, this trend should continue in the coming months.

Bottom Line

The Toronto real estate market has strengthened markedly over the past couple of months, driven mostly by falling interest rates and increased consumer confidence. Condos continue to be the ‘weak sister’ but the condo market is also improving. All signs point toward a healthy spring market in 2025.