A Surge in Sales but a Dip in Prices
The Toronto real estate market has experienced a significant surge in activity, with existing home sales in Greater Toronto showing a remarkable increase. According to the Toronto Regional Real Estate Board (TRREB), January witnessed a 39% hike in unadjusted sales compared to the same month last year, with seasonally adjusted sales up by 10%. This resurgence is attributed to the decline in bond yields since October, leading to more affordable financing options. However, this uptick in sales has not translated into higher home prices, which have continued to slide lower.
The Long Road to Price Recovery
Despite the increased activity, experts from one of Canada’s largest banks, BMO, caution that the road to price recovery will be long. They note that while the surge in sales may prevent further declines and could eventually boost home prices, returning to the all-time highs witnessed in 2022 will take years, not months. The bank highlights that the market is still about 19% below its peak, with affordability stretched and the investment math challenging at current rates.
Market Dynamics and Future Outlook
The recent growth in sales, while impressive, has only been enough to balance the market, with the sales to new listings ratio remaining at 50% in January. This indicates a market that is neither hot nor cold, but rather in a state of equilibrium. The slight tightening of the market, due to the growth in sales outpacing new inventory, has not been sufficient to halt the downward pressure on home prices.
Looking ahead, the momentum seen at the start of the year is promising, but it remains to be seen whether it can carry into the spring, traditionally a much busier period for the real estate market. The central bank’s stance on rate cuts will also play a crucial role in shaping the market’s trajectory.
The Toronto real estate market is in a phase of transition, with sales rebounding but prices continuing to face downward pressure. The recovery in home prices is expected to be a prolonged process, measured in years rather than months. For investors and homeowners alike, patience will be key as the market gradually finds its footing. The current dynamics offer a mixed bag of opportunities and challenges, with careful navigation required to make the most of the evolving landscape.
Source: https://betterdwelling.com/toronto-real-estate-recovery-will-takes-years-not-months-bmo/; https://betterdwelling.com/toronto-real-estate-sales-surge-39-prices-fall-further-w-robust-supply/
