“The mood and emotions that best describes buyers and sellers within the Toronto Real Estate market in February is…“Impatience.”
In February, Toronto home sales saw a yearly increase of 17.9% and a monthly surge of 32%. Additionally, new listings rose by 37% compared to last month and by 33.5% compared to the same period last year. After over a year of uncertainty resulting from rate increases, buyers who had remained on the sidelines have now recalibrated and adjusted their expectations for the type of property they can afford to purchase. This is a clear indication that many buyers are beginning their search, as there is only so long we can keep the real estate market on pause.
The anticipation of rates decreasing is building confidence and has led many buyers to start educating themselves in different segments of the real estate market. . Spring is definitely in the air as more homes listed for sale are quickly receiving multiple offers, especially in the more affordable outlying neighborhoods surrounding Toronto. Buyers are keeping their options open and, if need be, driving until they qualify.
Not surprisingly, many sellers have not rushed to list their properties for sale, as they expect and hope that lower rates will bring them higher prices. This is a classic recipe for demand outstripping supply, and values are expected to rise in the coming months. We’re finding that the most active sellers are those with rates that don’t mature for another year or two. Many carry the notion that this may be the best opportunity to move up by porting and blending their mortgage, resulting in a new rate far lower than current interest rates. Furthermore, these move-up buyers are being stress-tested at a much lower rate because of this approach. The market is exhibiting many opportunities for move-up buyers and renters who have taken the time to save for a larger down payment over the past year.
The current area of interest is townhomes, semi-detached, and lower-priced freehold properties. These property types are receiving the most attention and, in most cases, multiple offers. Sales have notably increased across various segments, with detached homes up by 21%, semi-detached by 11.5%, and townhouses by 24.8%. As prices for these properties, particularly semi-detached homes which have seen the most significant price increase at 5%, start to rise, this will be the turning point, and buyers will be forced to consider the next most affordable real estate… condos.
While the construction of new condo developments has been paused due to higher rates, many condos have been built and are coming to the market this year. The February assignment market continued to be very active as a result of investors who haven’t been able to close due to the increased rates. However, many builders are being creative by providing incentives as well as being prepared to take units back and wait until the market picks up. We’ll be looking in the months ahead to see how many will be added to the desperately needed rental pool and how many will simply be placed on the market to be sold. Everyone should be concerned with the future supply being nonexistent due to the delay in new condo starts in 2024. Because of this and contrary to government initiatives, the future supply will simply not be enough to satisfy the pent-up demand and the increasing immigration to our city.
