Toronto's housing market posted its second consecutive month of year-over-year sales gains in April, but brokers on the ground say the rebound is anything but broad-based with entry-level segments doing the heavy lifting while premium properties and micro-condos remain largely stagnant.
Figures released on Tuesday by the Toronto Regional Real Estate Board (TRREB) showed 5,946 home sales recorded in the GTA in April, a 7% increase compared with the same time last year. New listings were down 9.3% year over year to 17,097, a tightening dynamic that suggests more competition among buyers in at least some corners of the market.
The average selling price ticked lower from a year earlier, falling by 4.9% to $1,051,969, although prices showed early signs of stabilizing on a month-over-month basis.
"We have experienced an uptick in home buying activity so far this spring," said TRREB President Daniel Steinfeld. "Buyers have taken advantage of more affordable housing market conditions on the back of lower home prices. If market conditions continue to tighten and home prices level off, this could be a signal to intending homebuyers who remain on the sidelines."
Marshall Tully, a Toronto-area mortgage broker, said the activity he's seeing closely tracks that picture, although it's concentrated in specific price bands.
"There's definitely more activity in certain segments," he told Canadian Mortgage Professional. "For Toronto, it'd be the starter home. The $1.1 million to $1.8 million [range] in the downtown core has been pretty active, and then condos are starting to pick up a little bit [too]."
A condo segment starting to stir
The condo market has been a major source of drama in Toronto over the past few years, with prices sliding as demand plummeted amid appraisal issues, climbing interest rates and lower immigration — once a key source of purchase activity.
But recently on the condo side, Tully says sub-$600,000 units with meaningful amenities have been drawing disproportionate interest, even attracting bidding wars in some cases.
"Those units were probably $700,000 to $750,000 a year and a half ago," he said. "So what you're getting as a value for that price point is now starting to make sense for someone getting into their first home."
The story is different at the lower end of the condo market, especially when it comes to the notoriously cramped units that sprung up around the city in recent years. "If you get down to a sub-500 square foot condo with not a lot of amenities, there are hundreds of them available and there's not a lot of action there," Tully said.
Policy tools gaining traction with first-time buyers
Policy changes have also been a factor for first-time buyers. The federal government's expansion of insured mortgage eligibility — including 30-year amortizations for insured mortgages — appears to be gaining traction among clients.
"Most clients that are buying and qualify for that 30-year amortization are taking it — not so much to qualify, just more so to give themselves breathing room," Tully said. He added that borrowers can still use prepayment privileges to pay down their mortgage faster if cash flow allows, making the longer amortization a risk-management tool as much as an affordability one.
TRREB's chief information officer Jason Mercer pointed to ongoing headwinds that have kept a lid on the recovery. "We still have a substantial amount of pent-up demand in the marketplace," he said. "More certainty on the trade front and an easing in geopolitical tensions would result in further improvements in market activity."
Tully echoed that caution, highlighting uncertainty around the conflict in Iran and ongoing Canada-US trade negotiations as factors keeping many would-be buyers on the sidelines. Premium and luxury housing, he said, remains largely frozen.
Still, he sees a case for buyers who are financially stable and committed to where they want to live. "For those that are in strong employment positions and know where they want to live for five or more years, or are starting a family, there are opportunities."
A key question now for mortgage market watchers: does the current moment mark the early stages of a long normalization following years of historically low transaction volumes, or could the ongoing freeze stretch on longer than expected?
Tully said the COVID-era buying frenzy pulled forward demand that would otherwise have sustained the market through recent years — and that imbalance is still working itself out.
On rates, he offered a note of urgency for fence-sitters: "Rates have certainly bottomed out and are probably going to start moving in the other direction — meaning upwards. That might be somewhat short-lived until we get oil prices back down and the Iran war situation resolved."
As for where prices are headed, he sees most of the market approaching a floor — with one notable exception.
"I think people are starting to see that it's not the worst time to jump in and are starting to get a bit more comfortable with the idea," he said. "But there are some segments, like those smaller condos, that might continue to go down a little bit. There's a ton of inventory that's going to take a while to get soaked up."
CMP
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