A house for sale sign is shown in front of a house in Oakville, Ont., west of Toronto, on Feb. 5, 2023.Richard Buchan/The Canadian Press
A rejuvenated Toronto-area real estate market is drawing a rising number of buyers away from the sidelines as they strive to lock in deals ahead of an anticipated upturn in the market later this year, observers say.
The recent rebound comes as the Bank of Canada holds its key interest rate steady and rates on fixed-term mortgages have dipped, bolstering the confidence of buyers.
If the Bank of Canada cuts its benchmark rate later this year as expected, Toronto Regional Real Estate Boards chief market analyst Jason Mercer predicts home sales are likely to pick up even further.
“There will be more competition between buyers in 2024 as demand picks up and the supply of listings remains constrained,” says Mr. Mercer. “The end result will be upward pressure on selling prices over the next two years.”
Sales in the Greater Toronto Area jumped 37 per cent in January compared with January of last year. Sales also rose 9.6 per cent from December on a seasonally adjusted basis, according to TRREB, though prices remain relatively flat. The average price in the GTA in January was $1,026,703, a slight decrease from $1,084,692 in December.
The data show early signs of life in the housing market, but Andre Kutyan, broker with Harvey Kalles Real Estate, said that while it means homeowners are able to sell, many were forced to reduce the asking prices they set last summer and fall.
“There are people at the table, whereas before they were not present,” he says.
For example, Mr. Kutyan points to a two-plus-one bedroom unit at the Four Seasons Private Residences in Toronto that he recently sold for $5.93-million – which was still half a million below the asking price set last summer – and less than the current owners paid more than two years ago.
The sellers purchased the unit, located at 50 Yorkville Ave., in late 2021 for $6.25-million. They listed it last July for $6.495-million before Mr. Kutyan lowered the asking price – first to $6.395-million in the fall, and then to $6.250-million, where it sat for the rest of the year.
In another case, Mr. Kutyan listed a 1,160-square-foot, two-bedroom corner unit near Avenue Road and St. Clair Avenue West last summer with an asking price of $1.779-million.
The sellers trimmed the price until it reached $1.719-million in November. A buyer came forward with an offer in the New Year and the unit sold for $1.68-million.
Mr. Kutyan says the buyers had sold their existing home in November so they were ready to come to a quick agreement.
“As long as everyone’s acting reasonably, we can get to a result,” he says.
Bay Street is also keeping a close eye on inflation and how that could affect the Bank of Canada’s decisions on interest rates.
Claire Fan, economist at Royal Bank of Canada, notes that the country’s economy expanded in November at a quicker pace than expected, though she says that the accelerated economic growth towards the end of 2023 is unlikely to be repeated.
During the first half of 2024, she expects pressure from elevated interest rates to curb consumer demand, stalling growth in output and inflation.
RBC expects the Bank of Canada to cut its benchmark rate in June.
RBC economist Robert Hogue says the larger window of opportunity for buyers is likely to open only after interest rates have dropped materially – which he foresees in the latter stages of 2024 or into 2025.
“There will be a lot of pent-up demand to satisfy in the market once confidence returns, which could heat things up in a hurry,” says Mr. Hogue.