After a slow spring and early fall real estate market, it looks like the central bank’s rate cuts are starting to take effect, as suggested by the Toronto Regional Real Estate Board’s (TRREB) October report.
Annual home sales in the GTA surged by 44.4% in October, showing that buyers have re-entered the market in response to the Bank of Canada’s four successive interest rate reductions.
Although we are still in the early phase of the Bank of Canada’s rate-cutting cycle, it seems that a growing number of buyers stepped back into the market in October. The average selling price was up by 1.1 per cent compared to October 2023 to $1,135,215 and edged up by 1.5 per cent month over month. While prices were up for detached and semi-detached homes year over year, at 1.2 per cent and 0.7 per cent, respectively, condos and townhomes didn’t see any price gains.
New listings were up by 4.3%, which is a slower rate than in previous months, suggesting that sellers might be holding off until market activity picks up in the spring.
Interest rates trending lower impacts behaviour on the buying and selling side. While buyers continue to wait for rates to drop before purchasing, sellers are then waiting to list their home when more buyers enter the market.
On a seasonally adjusted basis, October sales increased month-over-month compared to September.
Sales across all property types jumped with detached home sales increasing by 46%, semi-detached by 44%, townhouse by 56 % and condos by 33.4%.
Homes are still selling more slowly than they did last year, now spending 28 to 30% more time on the market compared to last year. This means that supply takes longer to get absorbed, and the market will definitely need to speed up its absorption rate if it hopes to see a seller’s market in the spring.
The current reading on “days on market” metrics indicates a market that is balanced, or even leaning in favour of buyers, rather than sellers.
First-time homebuyers, who typically enter the market by purchasing condos, are the most sensitive to interest rate changes and are beginning to purchase units again. Because there is substantial inventory, buyers still have a lot of negotiating power.
No supply/demand imbalance has been more pronounced than the 416 condo sector. As a result, looking at the 416 condo sector can often tell us a lot about the market. In the past few months, year-over-year growth in condo sales has been relatively low or negative, but in October, condo sales posted pretty significant gains. 32.2% more 416 condos sold this October than last October, and similarly, 35.9% more 905 condos sold.
It is reasonable to assume that the returning affordability brought on by falling interest rates and falling condo prices has helped make these units more attainable for entry-level buyers, downsizers, and investors.