Toronto may be starting to feel the benefits of recent interest rate cuts by the Bank of Canada, as homebuyer activity in the Greater Toronto Area (GTA) showed signs of picking up in July.
The Toronto Regional Real Estate Board (TRREB) reported a slight increase in home sales last month and a greater selection of listings, potentially signaling a shift in buyer sentiment.
“It was encouraging to see an uptick in July sales relative to last year,” said TRREB president Jennifer Pearce. “We may be starting to see a positive impact from the two Bank of Canada rate cuts announced in June and July. Additionally, the cost of borrowing is anticipated to decline further in the coming months. Expect sales to accelerate as buyers benefit from lower monthly mortgage payments.”
TRREB reported 5,391 home sales through its MLS System in July 2024, marking a 3.3% increase from the 5,220 sales recorded in July 2023.
The surge in buyer activity is accompanied by an even larger increase in new listings, up 18.5% compared to July 2023. This flood of new inventory suggests that sellers, too, are responding to the changing market conditions, perhaps anticipating increased buyer interest.
While sales are increasing, prices remain stable due to the influx of new listings. This situation presents a unique opportunity for buyers who have been waiting on the sidelines, potentially allowing them to enter the market before prices begin to climb again.
The MLS Home Price Index Composite benchmark was down by approximately 5% year-over-year in July 2024. The average selling price of $1,106,617 represented a slight 0.9% decrease from July 2023’s figure of $1,116,950.
“As more buyers take advantage of more affordable mortgage payments in the months ahead, they will benefit from the substantial build-up in inventory,” TRREB chief market analyst Jason Mercer said in the report. “This will initially keep home prices relatively flat.”
However, Mercer also warned of potential price increases down the line as inventory is absorbed.
“Market conditions will tighten in the absence of a large-scale increase in home completions, ultimately leading to a resumption of price growth,” he added.
TRREB CEO John DiMichele pointed out recent policy developments that could further impact housing supply. He praised Toronto City Council’s decision to explore changes in building codes that could facilitate the creation of more family-sized multi-residential units.
“Innovation in new home construction must continue,” DiMichele said. “This would make it easier to create a variety of multi-family units large enough for families. Another important part of the housing formula is connection to public transit. We are very encouraged to hear that we are closer to an opening date for the Crosstown LRT and are looking forward to a firm announcement.”
As the GTA housing market enters this new phase, all eyes will be on whether this modest increase in activity is the beginning of a larger trend or a temporary blip. With further interest rate cuts anticipated, the coming months could prove crucial in determining the long-term trajectory of one of Canada’s most watched real estate markets.
CMP
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