September 2024 marked a critical turning point for the Toronto real estate market. After years of volatility and unpredictable price movements, the latest data from the Toronto Regional Real Estate Board (TRREB) shows a shift in market dynamics: while sales have risen, prices have seen a slight decline. This juxtaposition signals a changing landscape, creating new opportunities for both buyers and sellers. Let’s explore what made September 2024 so unique and why it could signal the beginning of a broader market shift.
The Numbers That Defined September 2024
According to TRREB, home sales in September 2024 increased by 8.5%, reaching 4,996 transactions compared to 4,606 in September 2023. This uptick in sales reflects growing buyer confidence, fueled in part by a more favorable lending environment and a slight easing in home prices.
However, while sales are up, the average selling price dipped by 1%, from $1,118,215 in September 2023 to $1,107,291 in September 2024. This marks a subtle but significant shift: while demand is increasing, sellers are adjusting their expectations, leading to softer price points across various property types.
The contrast between higher sales and lower prices is crucial to understanding the new balance of power in Toronto’s real estate market. Buyers are no longer facing the bidding wars and steep price hikes that characterized previous years. Instead, they’re finding more room for negotiation, while sellers are adjusting to a market where pricing strategies have become more critical.
What’s Driving Sales Growth?
The key drivers behind the sales increase in September 2024 include lower interest rates, new mortgage guidelines, and the influx of listings that provided buyers with more choices.
- Interest Rate Cuts: The Bank of Canada’s decision to cut interest rates earlier in 2024 has had a profound impact on the market. Lower mortgage rates have made homeownership more affordable for a larger segment of buyers. In particular, the prime rate in September 2024 stood at 6.5%, down from its peak earlier in the year. This reduction has made monthly mortgage payments more manageable, encouraging buyers to re-enter the market.
- Mortgage Lending Changes: Changes to mortgage lending guidelines also played a significant role. With longer amortization periods and more flexibility for loans on properties over $1 million, more buyers were able to enter the market. Additionally, the elimination of the stress test for existing mortgage holders looking to renew at better rates gave many homeowners confidence to sell and upgrade.
- A Surge in Listings: A 10.5% year-over-year increase in new listings also contributed to the rise in sales. In September 2024, 18,089 new listings entered the market, compared to 16,377 in September 2023. With more homes available, buyers had a wider range of choices, and many acted quickly to secure favorable deals before prices fluctuated further.
Falling Prices: A Welcome Sign for Buyers
While the increase in sales is encouraging, the slight drop in prices has also been a welcome relief for buyers. The 1% year-over-year decrease in the average selling price indicates that sellers are more willing to negotiate, particularly in segments of the market where prices were previously inflated. For many buyers, particularly first-time buyers and those entering the condo and townhouse markets, this represents a critical opportunity to secure a property without the competitive pressures of previous years.
For example, condo apartment prices in Toronto (416) dropped by 3.5%, with the average price now at $707,917. Similarly, prices for townhouses in the 905 region fell by 0.5%, bringing the average price to $887,023. These declines make these property types more accessible to a wider range of buyers, particularly those who have been priced out of the market in recent years.
However, not all property types experienced price drops. Semi-detached homes in Toronto (416) actually saw a slight increase in prices, rising 1.3% to an average of $1,090,749. This demonstrates that while overall prices may be softening, specific market segments remain resilient, especially those appealing to higher-income buyers.
Sellers Adjust to the New Reality
For sellers, the September 2024 market presented new challenges. The increase in new listings means that competition among sellers is higher, and pricing properties correctly has become essential to attracting serious buyers. Overpricing a property in this environment could result in it sitting on the market longer, while competitively priced homes are more likely to attract multiple offers.
The data also shows that days on market (DOM) has increased slightly. Homes in September 2024 took an average of 30 days to sell, compared to 27 days in September 2023. This subtle increase reflects the shifting power dynamic, as buyers now have more choices and negotiating power than they did during the height of the seller’s market.
In this new environment, Jason Mercer, TRREB’s Chief Market Analyst, emphasized that “the annual improvement in September home sales was more than matched by the increase in new listings over the same period. This resulted in a better-supplied market and increased negotiating power for buyers re-entering the market“.
A Balanced Market for the First Time in Years
Perhaps the most significant development in September 2024 is the shift toward a more balanced market. After years of favoring sellers, the GTA real estate market is finally leveling out. Buyers now have more negotiating power, and sellers are being forced to price their properties more competitively.
For those looking to buy, the increase in inventory is providing more options, and the falling prices in key segments like condos and townhouses are making homeownership more accessible. Additionally, lower interest rates have made it easier for buyers to secure financing, further fueling the demand for homes in Toronto and the surrounding areas.
For sellers, the key to success in this market is adaptability. Homes need to be priced accurately, and sellers should be prepared for longer negotiation periods as buyers take advantage of the increased competition. Those looking to sell high-value properties, such as detached homes in Toronto, may still find buyers, but even in this segment, strategic pricing will be critical.
What’s Next for Toronto’s Real Estate Market?
Looking ahead, several factors could shape the Toronto real estate market in the coming months. Interest rates are expected to remain low, which should continue to drive demand, particularly among first-time buyers and those looking to move up the property ladder. Additionally, the new mortgage lending guidelines are likely to have a sustained impact on buyer behavior, making it easier for more GTA households to qualify for homes over $1 million.
However, as more new listings enter the market, sellers will need to be vigilant about pricing strategies. Overpricing in a competitive environment will likely result in extended time on the market and reduced buyer interest. On the other hand, sellers who adjust their expectations and price their homes competitively may still attract multiple offers, even in a more balanced market.
The market’s trajectory will largely depend on continued economic stability and buyer confidence, both of which have been bolstered by the recent interest rate cuts and lending guideline changes. As we head into the final quarter of 2024, it’s clear that Toronto’s real estate market is entering a new phase, one defined by balance, opportunity, and cautious optimism.
Conclusion: September 2024 Signals a New Beginning
September 2024 was a turning point for the Toronto real estate market. With sales up and prices down, both buyers and sellers are adjusting to a new reality. Buyers are benefiting from increased inventory and softer prices, while sellers are navigating a more competitive landscape. For those looking to buy, this could be the ideal moment to enter the market, particularly in the condo and townhouse segments. For sellers, the key to success lies in adaptability, strategic pricing, and patience.
As the market continues to evolve, September 2024 will likely be remembered as the month when Toronto’s real estate market began to stabilize, offering renewed hope for buyers and new challenges for sellers.
