Prices slightly ticked up in Toronto, but the fundamentals worsened across Canada. August is generally a little slower with people’s holidays, and it is common to see more listings in September than in August. That said, it is uncommon for September to be the month with the highest number of listings. Going into the end of the year when buying dries up this does bode well for the real estate market.

Key Numbers

Toronto Central Prices Up 10-15%

GTA Prices Up 2-3%

Toronto Suburb Prices Flat Overall (some down, some up)

Active GTA Listings Up 10%

Vancouver Central Prices Flat

GVA Prices Down 2%

Vancouver Suburb Prices Up 10%

Active GVA Listings Up 15%

Topics

Downtown Toronto Prices Rise (but not really), Mostly Flat Across the Country

Supply Flood

Rate Cuts 

Downtown Toronto Prices Rise (but not really), Mostly Flat Across the Country

Downtown Toronto prices did rise but this was mostly due to a change in the mix of detached/townhouses being sold vs. condos, with September having more homes than condos being sold which lifted the median and average prices. The average detached home in Toronto declined by 5% in price vs. August. This gives the illusion of higher prices with the different mix, when in reality it appears prices are still falling.

In the Greater Toronto Area (GTA), the trends are the same with more higher-priced detached homes being sold than cheaper condos. Downtown did lift the average price but generally, the prices were mixed.

In BC, the prices continue to be suppressed and there is no end in sight to seeing these prices rise. Downtown Vancouver prices, flattened out and remain slightly up in 2024 but down bout 10% from last September.

The Greater Vancouver Area (GVA), saw prices decline and are now negative on the year and flat over the past 3 years.

The prices overall have flattened out this month which is encouraging, but going into the end of the year we would expect the prices to decline. The main factor will likely be the flood of supply that is in all markets right now.

Supply Flood

Heading into the slower months of October, November, and December the housing market better hope either buyers enter or sellers start taking properties off the market. At this rate, we could start to see some desperate situations.

GTA

In the GTA, the supply continues to increase with a consistent tick higher as we enter the 2009 levels of housing supply. Which was the last time total listings exceeded 25,000 in a month (currently above 25,000). It is very rare to see such high listings and so little buying, even in 2009 with 25,000+ listings, more properties were being bought. It is hard to believe after the Great Financial Crisis people were buying more than today. However, prices had already dropped considerably, and the interest rates were lower. We will likely need one of those two things to happen in this situation.

In the GVA, they have grown a lot and expanded a lot in the last 10-15 years but it is apparent listings are out of control vs. the actual homes being sold. 

GVA

In BC, the trend continues downward as supply is undeterred and has doubled since January of this year. In the Greater Vancouver Area (GVA), there are almost 20,000 listings for a population of about 2.7 million people. In comparison, the GTA has about 25,000 listings but a population of about 6 million. In the GVA, there are more than DOUBLE the listings of that in the GTA per capita. New listings are rising and not many are selling. This should lead to even greater weakness in BC. 

While the GTA continues to weaken, the GVA is falling apart. There is not much hope for Vancouver at this point, we wish there was something positive to say about the real estate out west but there isn’t. Calgary is doing well though, maybe if some Albertans want to pay double for a home in Vancouver, they can venture out west over the mountains.

Rate Cuts, New Rules, and Going into Year-End

Rate cuts help housing. The rates have been decreasing and this WILL help the real estate sector, they just take some time to work through the system. In the last monthly housing update, we discussed the secondary issue is the increased costs of owning a home. These issues persist and are dampening the effects of the rate cuts. Inflation is still positive, and those costs continue to grow even with rates dropping. As an example, home insurance costs have increased 15% over the past 2 years. Toronto property taxes have increased more than 20% over the last 3 years. A 1% interest rate cut to your mortgage does help but it is muted by increased home ownership costs. We will need to see many more cuts before seeing a drastic improvement in home affordability.

Things look very grim heading into the end of the year and even though many forecasts have the Bank of Canada decreasing interest by 50 bps per meeting, it will likely be too late to have a meaningful impact in 2024. This should give the real estate the kickstart it needs in 2025 though. Our population has ballooned, and the tax code does make owning a home in Canada a great investment. There are more options to get into the housing market than before and on a relative basis, the affordability should be better next year. 

Summary

The price appreciation is likely just a fluctuation in the sales mix as opposed to actual price growth. The price declines have been mainly due to continued increases in supply across the board and very few buyers wanting to purchase a home at these prices. This will likely continue until the end of the year, but we remain optimistic that housing prices will pick up in the spring/summer of 2025 with significantly lower rates, which should bring affordability from extremely terrible to bad but tolerable.

Justin, Konrad, and Merriel

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