The Toronto real estate market in early 2024 has seen a significant shift in consumer sentiment, with buyers re-entering the market and multiple offers becoming more common. This sudden optimism begs the question: what factors are driving this change?
Bank of Canada’s Influence
In late 2023, the Bank of Canada’s messaging hinted at potential rate adjustments, leading to speculation that they may have been above the optimal rate by up to 50 basis points. As of January, discussions have shifted from “if” to “when” rates will drop, with fixed-rate mortgages already seeing decreases and preapprovals on the rise.
Consumer Confidence Boost
With the belief that the worst is behind us and the anticipation of future rate drops, consumers are feeling more confident about entering the real estate market, especially with the added incentive of exceptional weather in the Greater Toronto Area (GTA).
Attractive Real Estate Segments
In the early months of 2024, the freehold market, including townhomes, semi-detached, and detached homes, is expected to outperform the condo market. While December typically sees slower activity, January often brings a surge in inventory, particularly in the resale condo market, which serves as an affordable entry point. However, with only 4.8 months of supply, this balance may not last long as demand continues to rise.
TORONTO MLS SALES
Monthly Series with Trend Line
Source: Toronto Regional Real Estate Board
RENTAL MARKET DYNAMICS
The rental market has also experienced tightening, with landlords adjusting asking prices in response to increased borrowing costs. With only 1.6 months of inventory available, the rental market is expected to remain competitive as borrowing costs decrease.
As we navigate the evolving landscape of the Toronto real estate market in early 2024, it’s crucial to stay informed about the factors influencing trends and opportunities in the industry.