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Toronto Spring Market Winding Down




Following the normal pattern, the spring market peaked in May and is slowing down as we head into summer. Prices so far in June are slightly lower than last June, and are still following the 2023 trend line very closely.

Last summer, prices fell steeply during the summer and bounced back only weakly in the fall, mostly because of dashed hopes for interest rate cuts. This year, we have already had our first rate reduction and, while it was only 0.25%, there is a lot of optimism that we will have more cuts this year. This could limit the fall in prices over the summer and may even give us a very nice bounce in the fall.

Consistent with the current softening in prices, the inventory of houses for sale is moving higher. We are now in a “balanced” market, favouring neither buyers nor sellers. Inventory may drift a bit higher over the summer, but we will probably avoid an outright buyers’ market as long as rates keep coming down.


Condo Apartments

Condo prices are also falling this month. Unlike houses, condo prices peaked in April and have been falling slowly ever since. Last year, condo prices fell steadily over the second half, without any bounce at all in the fall. By the end of the year, prices were right back where they started in January.

There were two reasons for this: first, high interest rates are a bigger affordability factor for condos than for houses; and, second, many owners of rental condos have been dumping these condos because of higher mortgage payments on both their houses and their rental condos. Falling interest rates may keep condo prices from falling as steeply as they did last year.

Over the past three months, condo inventory has been climbing and is now higher than at any point last year. We are deep in buyers’ market territory and this suggests that the condo market may be weaker than the house market for the rest of this year.


Bottom Line

The recent 0.25% cut in the Bank Rate is good news for both houses and condos. Without further cuts, however, the impact on prices is likely to be minimal.

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