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REAL ESTATE MARKET REPORT - 2024 Year In Review

2024 was not quite the annus horribilis that the real estate resale market experienced in 2023, but it was still an extremely challenging year, with year-end results marginally better than the previous year. In 2023, the Toronto Regional Real Estate Board reported 65,877 properties sold. By year-end, approximately 68,500 homes will have changed hands, a modest 4 percent improvement.

These numbers can only be appreciated when viewed from a historical perspective. Throughout the decade leading up to the COVID-19 pandemic annual sales averaged over 90,000 properties, with 113,040 sales in 2016. The highest number of sales ever recorded was 121,712 in 2021 during the height of the pandemic. Sales in 2024 are, sadly, consistent with those recorded in the late 90s. For example, in 1997, 69,530 properties traded hands.

2024 was an uneven year. It was historically slow for the first nine months. In its fight to tame pandemic driven inflation, the Bank of Canada had, by July, increased its overnight lending rate to 5.00 percent, a rate not seen in decades. Bond rates also increased, resulting in fixed-term, five-year mortgage interest rates approaching 6.00 percent.

Unlike previous real estate recessions, there was no decline in the average sale price for all properties sold. In 2023, the average sale price came in at $1,126,266. This year, it will come in at around $1,120,000, a marginal difference. Condominium apartment sales were the weakest, and condominium apartment sale prices lost ground throughout the year, unlike ground-level homes—detached, semi-detached, and townhouses—which strengthened throughout the year. Detached and semi-detached property sale prices averaged approximately $1,265,000 throughout the Greater Toronto Area, and almost $1,500,000 in the City of Toronto.

During real estate recessions, sale prices typically decline. The period between 1990 and 1996 is the most recent example when house prices declined by more than 25 percent. This did not happen in 2024. Firstly, demand has remained strong. Massive population growth over the last few years has resulted in a supply shortage. Secondly, most homeowners enjoyed mortgages with incredibly low rates, unlike the 90s, allowing them to hold their prices until an acceptable offer was presented by a buyer. Although multiple offers declined in 2024, it was not unusual to see bidding wars for desirable properties in sought-after neighborhoods, particularly semi-detached properties in the $1,250,000 price range.

In July, the Bank of Canada made its first rate cut, a modest 0.25 percent, but it was the beginning of more cuts to come. By year-end, the Bank had made six more cuts, bringing the overnight rate to 3.25 percent. With these rate cuts came an improved resale market: mortgage interest rates declined, allowing buyers who had been marginalized by high mortgage rates to re-enter the market. By the end of 2024, year-over-year sales for the last few months of the year were up by more than 40 percent. 2024 is clearly closing on a positive note.

It should be noted that there were major industry changes in 2024. The provincial government implemented Phase II of its regulatory changes, designed to achieve more industry transparency. The legislation came into affect in December 2023 but its effects were not experienced until this year. Buyer and seller representation became more transparent, a concept called “self-represented party” was introduced, a mandatory consumer information guide became available, and perhaps the most dramatic change—the content of offers could be shared with competing buyers by sellers (open bidding). The latter change was in response to the blind-bidding frenzy that was prominent during the pandemic, and the belief that it drove up average sale prices. A year after sharing the content of offers became legal, it has been rarely used. No doubt, market conditions are partially responsible for the lack of uptake in sharing content, but overall consumer (seller) reluctance has been primarily responsible. Unexpectedly and perhaps counterintuitively, buyer resistance to open bidding has been as forceful as that of sellers. This consumer response, both by sellers and buyers, is not likely to change going forward. Phase III changes are expected in 2025.

The Real Estate community is not sad to see 2024 come to an end. It was another challenging year, with wide swings in the Bank of Canada’s overnight rate and legislative changes that have, to some degree, altered the real estate sales landscape. As the year ends, it is comforting to note that the industry has met these challenges and is moving positively and optimistically into 2025. On a year-over-year basis the last few months were the most robust in 2024 pointing to growth in sales in 2025.

Prepared by: Chris Kapches, LLB, President and CEO, Broker

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REAL ESTATE MARKET REPORT - What to expect in 2025

In summary, 2025 indicators point to healthy economic growth, an improvement in borrowing costs, a moderate increase in home sales as well as a moderate increase in average sale prices. There will also be regulatory changes affecting the real estate industry providing enhanced consumer protection and transparency. The future is also clouded with challenges and uncertainties, particularly as a result of political upheaval being experienced in Canada and political change in the United States.

It is strongly anticipated that the Bank of Canada will continue lowering its overnight lending rate in 2025. The year begins with the rate at 3.25 percent. By year end the overnight rate should be down to 2.25-2.50 percent. This will have a positive impact on fixed mortgage interest rates, bringing the five-year mortgage rates to around 4 percent. Although substantially lower than borrowing costs that plagued borrowers through most of 2024, 4 percent is a long way from pandemic rates of 2 percent or lower that drove the real estate resale market to frenzied, record levels in 2021.

2025 will also see the cap on insured mortgages increase to $1.5 million from the previous cap of $1 million. This will enable, primarily, first-time buyers to purchase properties with substantially lower down payments, a hurdle that has marginalized buyers in expensive markets like Toronto and Vancouver.

The combined impact of lower borrowing costs and easier entry into the resale market with lower down payments will see the resale market improve compared to 2024. Sales are anticipated to increase by 6 to 8 percent bringing the total number of sales to the range of 72,600 to 74,000 properties. A welcome improvement over the 2024 total of 68,500, but a long way from the 90,000 sales (on average) achieved annually in the decade before the pandemic.

However, the on-going impediment to sales growth will be affordability. The demand is there. Population growth in the greater Toronto area has been enormous over the last few years, substantially greater than available supply. Unfortunately, household income has not kept pace with borrowing costs and the cost of housing. Even with lower borrowing costs and broader entry into the resale market, buyers will require a household income in excess of $250,000 to qualify to buy the average priced property in the greater Toronto area.

As in the case of sales growth, the growth in average sale prices in 2025 will be modest, somewhere in the range of 3 to 5 percent. The year will begin with the average sale price coming in at $1,120,000 and end in the range of $1,150,000 to

$1,175,000. Once again growth in average sale prices will be constrained by affordability. Buyers may want to pay more but the cost of financing will restrain their ability to do so. Home prices for detached and semi-detached properties will be substantially higher, averaging close to $1,300,000 in the greater Toronto area and more than $250,000 higher in the City of Toronto, exceeding $1,500,000.

Politically, an election will take place in Canada in 2025, and with that a new government which may develop new housing policies that will impact sales and average sale prices. Whatever housing policies are promulgated, their impact will not be felt until 2026. South of the border a new administration will be taking office. It’s possible that the new administration’s policies will create inflationary pressures which will, unfortunately, have an impact on borrowing costs. These pressures, assuming they materialize, will impact the economy in 2026 and beyond.

Ontario’s provincial real estate regulator will be bringing in Phase III of the changes to the Trust In Real Estate Services Act. The new regulations will further enhance transactional transparency, eliminate the financial incentive for inappropriate realtor behaviour, implement administrative penalties for minor realtor infractions, raising the bar on realtor qualifications, and making the regulator, the Real Estate Council of Ontario, subject to ombudsman oversight. These changes are anticipated but not certain. Regardless, the ultimate legislation will provide heightened consumer protection and transparency.

2025 begins positively and optimistically, but not without its uncertainties, especially on the political front. Affordability will remain the real estate market’s major concern, but with welcome signs of amelioration, albeit moderate, ahead.

Prepared by: Chris Kapches, LLB, President and CEO, Broker

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December 2024 Toronto Real Estate Market Report

2024 has now come to an end, and unfortunately, it finished, to quote T.S. Eliot, not with a bang, but a whimper. Only 3,359 properties were reported sold, almost 2 percent fewer than were reported sold in December of last year. Although in absolute terms, a decline of a mere 60 properties is a small number, it must be remembered that 2023 was one of the most moribund residential resale markets in over 25 years.

In total, 67,610 residential properties changed hands in 2024, a marginal improvement of 2 percent over the 65,877 properties reported sold in 2023. These numbers can only be appreciated from a historical perspective. Throughout the decade leading up to the COVID-19 pandemic, annual sales averaged over 90,000 properties, with 113,040 sales in 2016. The highest number of sales ever recorded for the Toronto Region was 121,712 in 2021 during the height of the pandemic. Reported sales in 2024 were, sadly, consistent with those recorded in the late 1990s.

There were reasons for December’s poor performance. Buyers were disappointed with the lack of movement in fixed mortgage interest rates, notwithstanding the Bank of Canada’s reduction in its overnight lending rate on December 11, bringing the rate to 3.25 percent. Five- year fixed mortgage rates have remained over 4 percent. Additionally, the Federal government increased the cap on insured mortgage loans to $1.5 million. Unfortunately, the changes did not take effect until December 15, too late for buyers to enter the market before the busy holiday season.

In December, the average sale price for all properties sold was $1,067,168, marginally – 1.6 percent – lower than the average sale price for the Region in December of 2023, which was $1,084,757. The Regional average sale price is deceptive. Condominium apartment sales made up almost 30 percent of all reported sales, with condominium apartment average sale prices for the Region coming in at only $681,855. If condominium apartment sales are excluded, the average sale price for other types of properties—detached and semi- detached—becomes substantially higher. Detached property prices averaged almost $1,400,000, and semi- detached property prices were well over $1,000,000. In the City of Toronto, detached property sales exceeded $1,600,000, and semi-detached property sales exceeded $1,300,000. Unlike previous real estate recessions, there was no appreciable decline in the average sale price, which is a contributing factor to the affordability crisis facing buyers.

Overall, 2025 indicators point to economic growth, improvement in borrowing costs, and moderate increases in home sales and average prices, although the future is clouded with challenges and uncertainties, particularly due to political upheaval in Canada and the United States.

Barring the impact of politics on the economy, it is anticipated that by year-end, the Bank of Canada will lower its overnight rate to 2.25 to 2.50 percent. This will have a positive impact on fixed mortgage interest rates, bringing the five-year mortgage rate down to around 4 percent—better, but still a long way from the 2 percent rate enjoyed by borrowers only a few years ago, and certainly not low enough to generate any form of robust or excited resale market.

The combined impact of lower, albeit modest, borrowing costs and easier entry into the resale market for properties valued at $1.5 million or less will result in an improved marketplace compared to 2024. Sales are anticipated to increase by 6 to 8 percent (although this forecast may be a little over-optimistic), bringing total sales for 2025 to the range of 72,600 to 74,000 properties. This will be a welcome improvement but still a long way from pre-pandemic sales numbers. In 2024, sales increased by 2.6 percent compared to 2023.

The growth in average sale prices will likely be even more modest than the growth in sales. The year-end average sale price for 2024 came in at $1,117,600, marginally lower than the average sale price of $1,126,263 achieved in 2023. That number was predominantly front-loaded to sales at the beginning of the year. It is anticipated that average sale prices will increase within the range of 3 to 5 percent. 2025 will begin with an average sale price of $1,117,600 and end with an average sale price of between $1,150,000 and $1,172,000.

Demand remains very strong and will continue into 2025. Population growth in the Toronto Region has been staggering over the last few years, substantially greater than supply. The problem for would-be buyers is affordability. Household income has not kept pace with borrowing costs and housing prices. Even with

the anticipated lower borrowing costs in 2025, buyers will require household incomes in excess of $250,000 to qualify to purchase the average-priced home in the Toronto Region.

The year 2025 begins much more optimistically than 2024, but not without its uncertainties, especially on the Canadian political front and the impact the new American administration may have on the Canadian and more importantly, the economy of southern Ontario and the Toronto Region. Aside from those factors that buyers will have no control over, affordability will remain the market’s major obstacle, although all signs point to improved conditions for buyers, certainly much better than the buying conditions in 2024.

Prepared by: Chris Kapches, LLB, President and CEO, BrokerPrepared by: Chris Kapches, LLB, President and CEO, Broker

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New property listed in Moss Park, Toronto C08

I have listed a new property at 1605 168 King ST E in Toronto. See details here

Welcome to King George Square Penthouse 1605. This boutique style building is located in the heart of the historical St Lawrence market. Ideally located within walking distance to the Financial district, Theatre district, The Distillery District, Cork-town, Design District, Eaton Center and TTC. Access to the expressways is minutes away. This suite is approx. 1110 sq ft and offers 2 bedrooms, 2 bathrooms and a den. Ideal for entertaining with a combined living and dining room with south views. The oversized open concept kitchen will appeal to the chef and boast a breakfast bar, granite counters, plenty of cupboards and stainless steel appliances. Both bedrooms have ensuite baths and a generous den for a home office. Amenities at King George consist of a 24 hr concierge, a gym, a billiard room, library, party room and a roof terrace for residence with a BBQ. Parking and locker are included.

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New property listed in Moss Park, Toronto C08

I have listed a new property at PH1605 168 King ST E in Toronto. See details here

Welcome to King George Square Penthouse 1605. This boutique style building is located in the heart of the historical St Lawrence market. Ideally located within walking distance to the Financial district, Theatre district, The Distillery District, Cork-town, Design District, Eaton Center and TTC. Access to the expressways is minutes away. This suite is approx. 1110 sq ft and offers 2 bedrooms, 2 bathrooms and a den. Ideal for entertaining with a combined living and dining room with south views. The oversized open concept kitchen will appeal to the chef and boast a breakfast bar, granite counters, plenty of cupboards and stainless steel appliances. Both bedrooms have ensuite baths and a generous den for a home office. Amenities at King George consist of a 24 hr concierge, a gym, a billiard room, library, party room and a roof terrace for residence with a BBQ. Parking and locker are included.

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October 2024 Toronto Real Estate Market Report

The Bank of Canada began lowering its benchmark rate on June 5th of this year. It did so again in July, September, and on October 23rd it made its biggest reduction, 0.50 percent, bringing its overnight lending rate to 3.75 percent. The Toronto and Region residential resale market did not immediately react to these rate reductions, in fact the market’s immediate reaction was one of caution, which further immobilized buyers.

Based on the policy statements accompanying the Bank of Canada’s rate reductions, more rate cuts were on their way. With mortgage interest rate levels higher than they have been in recent memory, and average house prices still high, potential buyers waited for a more affordable buying landscape. As a result, the market’s sales performance in July, August and September was abysmal. Higher sales volumes were being achieved more than two decades ago when the Region’s population was almost 2 million people fewer than it is today.

All that changed in October. The four rate cuts have provided some affordability relief, and buyers responded positively. In October 6,658 properties were reported sold, a 44.4 percent improvement over the 4,611 properties reported sold last October. Although this is a substantial, and welcome improvement, it is still lower than the typical number of sales in October over the past 15 years. For example, in October 2011, 7,642 homes traded hands. October’s numbers were also a welcome improvement over September’s sales. In September only 4,978 homes were reported sold. The 6,658 sales in October were a 34 percent improvement over last month’s results.

Average sale prices continued to stay strong. In October the average sale price came in at $1,135,215, 1.1 percent higher than the average sale price of $1,123,390 achieved last year. Average sales prices declined marginally in the 905 Region (less than 1percent) but strengthened in the City of Toronto. The average sale price for detached properties in the 416 Region came in at $1,778,855, an increase of 4.4 percent, while semi-detached properties came in at $1,315,547, an increase of 3.3 percent compared to October last year.

Condominium apartment sales improved along with other sectors of the resale market in October, although not quite to the same degree. In October condominium apartment sales throughout the Region were up by 33.4 percent whereas ground level property sales (detached, semi-detached and townhouses) increased by almost 50 percent year-over-year.

The increase in condominium apartment sales was, no doubt, in part driven by their continuing decline in average sale prices. Notwithstanding that sales of condominium apartments in the City of Toronto increased by 32 percent, the average sale price declined by 1 percent. The average sale price came in at $721,366. At the end of October there were 8,774 condominium apartments available to buyers. This represents 35 percent of the entire supply of available homes in the Region.

Generally, supply remains high compared to the years leading up to the pandemic market, which saw supply plummet. During the pandemic market, almost every property coming to market was immediately absorbed. At the end of October there were 24,481 properties available to buyers throughout the region, more than 25 percent higher than the 19,536 available last year. The number of new listings coming to market slowed in October. Although higher than last year, the number of new properties coming to market was reminiscent of the number of properties coming to the market in October in the years before the pandemic. In October 14,700 new listings came to market. In 2018 and 2019, 14,435 and 13,050 properties came to the market in October, respectively.

Semi-detached properties, particularly in Toronto’s eastern and western trading areas, continue to be the most sought-after property type. Desirable communities and price point are driving this sector of the marketplace. In the City of Toronto’s western trading areas all semi-detached properties sold for $1,315,547 (on average), in 19 days, and for 103 percent of their asking price. In the City’s eastern districts all semi-detached properties sold for $1,235,314 (on average), amazingly in only 13 days and (also amazingly), for 107 percent of their asking price. Unlike condominium apartments, the supply of semi-detached properties is almost non-existent. Throughout all the trading areas of the City of Toronto only 515 semi-detached properties were available for sale – representing only 2 percent of the Region’s entire inventory.

Looking forward towards the end of 2024 and into 2025 we are optimistic about the Toronto and Region residential, resale market. The Bank of Canada’s lower benchmark rate – now at 3.75 percent – has made purchasing a home in the Toronto Region more affordable but a return to pre-pandemic affordability is still far in the future. As October came to an end, five-year fixed term mortgage rates continued to hover around 4.5 percent, substantially higher than the 2 percent rates available before and during the pandemic. Another Bank of Canada rate cut is expected in December, likely another 0.5 percent. This will further drive the market momentum that we saw in October. Early November data indicates that the momentum is continuing.

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I have sold a property at 61 Ferrier AVE in Toronto

I have sold a property at 61 Ferrier AVE in Toronto on Oct 5, 2024. See details here

Welcome to 61 Ferrier Ave. This wonderful family home is nestled in one of Torontos most desirable neighbourhoods. The home is located on a tree-lined peaceful one way street and falls in the highly coveted Jackman School district. Easy walk to parks, the Danforth for shopping and restaurants. A beautifully front garden invites to this home. The open concept living and dining room offer hardwood floors and crown mouldings. A large family sized kitchen that boast Stainless Steel appliances, granite counters, an under mount sink, a wall of cupboards providing plenty of storage and double doors that walk out to the deck and beautifully landscaped garden. The second floor offers 3 bedrooms, plenty of closets, skylights and a cathedral ceiling in the primary bedroom. The finished lower level offers laminate floors and makes for a great family room/office. A renovated modern 3 pc bath and storage and laundry complete this fabulous home. Newer roof and basement was waterproofed

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New property listed in Playter Estates-Danforth, Toronto E03

I have listed a new property at 61 Ferrier AVE in Toronto. See details here

Welcome to 61 Ferrier Ave. This wonderful family home is nestled in one of Torontos most desirable neighbourhoods. The home is located on a tree-lined peaceful one way street and falls in the highly coveted Jackman School district. Easy walk to parks, the Danforth for shopping and restaurants. A beautifully front garden invites to this home. The open concept living and dining room offer hardwood floors and crown mouldings. A large family sized kitchen that boast Stainless Steel appliances, granite counters, an under mount sink, a wall of cupboards providing plenty of storage and double doors that walk out to the deck and beautifully landscaped garden. The second floor offers 3 bedrooms, plenty of closets, skylights and a cathedral ceiling in the primary bedroom. The finished lower level offers laminate floors and makes for a great family room/office. A renovated modern 3 pc bath and storage and laundry complete this fabulous home.

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I have Leased a property at 201 80 Western Battery RD in Toronto

I have sold a property at 201 80 Western Battery RD in Toronto on Jul 17, 2024. See details here

Located in the heart of Vibrant Liberty Village & designed by Award Winning interior Designer, Ceccone Simone, boasts Open Concept, well maintained floor to ceiling Windows throughout with 1 Bedroom 1 4pc Washroom with Tub, 1 Kitchen with stainless steel appliances,Ensuite laundry. Approx 90 Sq ft west facing Balcony. Building offers 3 Gyms, Indoor Pool, Whirlpool, Steam Rooms, Party Rooms, Caterers kitchen and bar, Patios for BBQ, Sports Lounge with Pool/ Billiard Table, Theatre room and Meeting Room Floor to ceiling windows throughout. Tenant to pay hydro

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June 2024 Toronto Real Estate Market Report

The Bank of Canada, as anticipated, reduced its benchmark rate in June, but it did not have the desired market effect. In fact it had the opposite effect. That’s because the rate cut was marginal, only 0.25 percent, not enough to move the resale market needle. Mortgage markets and bond markets had already analyzed and digested the prevailing economic data and had already priced into the Bank of Canada’s rate cut. Except for variable rates, still very lofty at 6.4 percent, there was no movement in fixed five year terms. After the Bank of Canada’s rate cuts, five year fixed term rates remain above 5 percent.

Since the Bank’s rate cut had no impact on fixed mortgage rates, affordability was not affected. Buyers were immobilized by this insignificant rate cut, now hoping for a better financing environment after the Bank meets again in late July.

Sales for the City of Toronto and the surrounding Region totalled 6,213 properties in June, 16.4 percent fewer than the 7,429 sales that were reported last year. The decline in sales was universal, affecting all housing types throughout the entire Region. Condominium apartments, the most financially sensitive housing type, dramatically demonstrated the affordability crisis. Condominium apartment sales declined by over 28 percent, notwithstanding that they are the least expensive housing type. The average sale price of condominium apartment sales came in at $727,861. Condominium apartment sales represented almost 50 percent of the overall Toronto and Region resale market, a huge drag on the monthly numbers.

Notwithstanding the decline in sales the average sale price for all properties sold, including condominium apartments has remained very resident.

In June, the average sale price came in at $1,162,167, marginally lower than it was last year. Even though affordability has plagued the resale market throughout 2024 (and the later half of 2023) the average sale price has continued to rise throughout the year. In January, the average sale price was only $1,025,262. It has increased by more than 13 percent since the beginning of the year.

Inventory has also increased throughout the first half of 2024. At the end of June there were 23,613 properties available to buyers, 67.4 percent more than the 14,108 available last year. This volume is now beginning to push beyond pre-pandemic inventory levels. At the same period, in 2018 and 2019, inventory levels were approximately 20,000. At the end of June there were 8,806 condominium apartment available to buyers. Almost 40 percent of the total available inventory is represented by condominium apartments.

Although sales and average sale prices of detached and semi-detached properties declined, the properties that sold did so in robust fashion. All detached properties in the City of Toronto sold in only 15 days and at 101 percent of their asking price. The average sale price for all detached properties sold came in at $1,758,649. All semi-detached properties sold in only 13 days and, amazingly, for 105 percent of their asking price. In Toronto’s eastern trading districts, all semi-detached properties sold in only 10 days on market and for an eye-popping 110 percent of their asking price. The average sale price for semi-detached properties in June came in at $1,282,000.

At first glance, it is difficult to reconcile the performance of detached and semi-detached properties against the backdrop of declining sales numbers. A deeper analysis indicates that demand, primarily due to population growth, remains strong. The problem is that most buyers can not afford to purchase detached and semi-detached properties with five year interest rates at more than 5 percent. In addition, there is the hurdle of the crippling mortgage stress test amounting to another 2 percentage points. Those that could afford the lofty detached and semi-detached properties aggressively bought them, and in almost record time, paying over the asking prices.

Condominium apartment sales are the weakest sector in the resale market. Inventory levels have increased substantially, approaching almost 9,000 units, as fewer apartments are absorbed by sales. At the end of June there are almost 9 months of condominium apartment inventory in the Toronto and Region resale market. Surprisingly the average sale price in Toronto’s central core for condominium apartments came in at $815,305. This is no doubt due to the fact that out of the 1,014 reported sales 20 of these apartments sold for prices between $1,750,000 to $2,000,000.

So what can the resale market anticipate for July? In a phrase, more of what happened in June. The central force is affordability, or a lack thereof. That will not change in July, although it might in August. The next Bank of Canada scheduled date for announcing its overnight target date is July 24th. It is anticipated that the Bank will once again reduce its overnight target by another 0.25 percent. This will result in five year mortgage interest rates coming down to around 5 percent. That will probably not be enough to significantly move the resale needle, which means that July and August (which are also seasonally slow months) will not be dissimilar to what the resale market experienced in June. A more aggressive rate cut by the Bank will stimulate the market resulting in a dramatic rise in sales.

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New property listed in Niagara, Toronto C01

I have listed a new property at 201 80 Western Battery RD in Toronto. See details here

Located in the heart of Vibrant Liberty Village & designed by Award Winning interior Designer, Ceccone Simone, boasts Open Concept, well maintained floor to ceiling Windows throughout with 1 Bedroom 1 4pc Washroom with Tub, 1 Kitchen with stainless steel appliances,Ensuite laundry. Approx 90 Sq ft west facing Balcony. Building offers 3 Gyms, Indoor Pool, Whirlpool, Steam Rooms, Party Rooms, Caterers kitchen and bar, Patios for BBQ, Sports Lounge with Pool/ Billiard Table, Theatre room and Meeting Room Floor to ceiling windows throughout. Tenant to pay hydro

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May 2023 Toronto Real Estate Market Report

The April 2024 Market Report concluded with the following forecast for May for the Toronto and Region resale market: “The average sale price will continue to hover around $1,150,000, with sales expected to come in at the 7,000-plus range.” Not surprisingly, May’s results came in as expected. The Toronto and Region achieved 7,013 property sales, and the average sale price came in at $1,165,691. As in previous months, the Toronto and Region resale market has and continues to be constrained by affordability, or more accurately, the lack thereof.

The 7,013 sales achieved in May were almost 28 percent fewer than the 8,960 sales reported last year. Comparisons to last year are not helpful in understanding the current Toronto resale market. Reported sales for May 2023 were the highest achieved in any month last year. The Bank of Canada’s benchmark rate had remained steady at 4.5 percent through the first 5 months of 2023. Buyers had adjusted to borrowing rates and to the extent their household incomes permitted, had enthusiastically entered the resale market. That buying enthusiasm was one of a number of economic factors that caused the Bank of Canada to increase rates in June, and then again in July. By August the resale market was in sharp decline, where it has remained. A decline in reported sales, not demand.

The decline in the average sale price, which was moderate, from $1,195,409 to $1,165,691 was driven by the decline in average sale prices in the 905 region and the 1,942 condominium apartments (almost 30 percent of all report sales) that sold at an average sale price of $730,815. In the City of Toronto, the average sale price for condominium apartments came in higher at $767,064.

In May inventory levels continued to rise. During the month 18,612 new listings came to market, 21 percent more than the 15,363 that came to market last year. By the end of the month there were 21,760 properties available to buyers, more than 83 percent higher than the 11,869 available last year. Although this number appears high by Covid-era comparison, it’s not out of line by historical comparison. For example, in May 2018 active listings totalled 20,919, and in May 2019, the year before the Covid-era disrupted the resale market, there were 20,017 properties available to buyers.

What the year-over-year data does not disclose is the enormous demand in the marketplace. This demand is constrained by a lack of affordability. With Toronto’s average household income before taxes hovering around $110,000 (CMHC) and average sale prices coming in at $1,165,691, many buyers are simply unable to participate in this market. Those that can are still driving a strong, robust resale market.

Throughout the Region, all detached properties sold in only 16 days and for 101 percent of their asking prices. In the City of Toronto, detached properties were reported sold in only 14 days and for 104 percent of their asking prices. The average sale price of all detached property sales in Toronto came in at an eye-popping $1,826,370. Semi-detached properties throughout the Region sold in only 13 days and for 106 percent of their asking prices. In the City of Toronto they similarly sold in only 13 days, but for 107 percent of their asking prices. The average sale price for semi-detached properties in Toronto came in at $1,416,496. Assuming the buyer has saved $284,000 (20 percent of the average-priced semi-detached property), the buyer would need to have a household income of approximately $240,000 in order to qualify for a mortgage of more than $1,100,000. In addition, the buyer would be expected to pay land transfer taxes of almost $50,000. Hence the affordability issue.

Condominium apartment sales continue to lag and act as a drag on the overall market. In May 1,942 condominium apartments were reported sold. On average these apartments took 25 days to sell and at only 99 percent of their asking price. A very different pace than detached and semi-detached property sales. The average sale price for all condominium apartment sales through the Region was $730,000. The poor performance of condominium apartment sales is especially due to affordability. Condominium apartments attract the first-time buyer cohort. First-time buyers, generally with lower household incomes, given prevailing mortgage interest rates and even average sale prices in the $730,000 range, are financially constrained from entering the resale market. It is for that reason the condominium apartment sales are underperforming compared to detached and semi- detached property sales.

As this Market Report was being prepared the Bank of Canada announced a 0.25 percent reduction in its benchmark rate, bringing it to 4.75 percent. The first reduction in four years. No doubt this will help with affordability, but only marginally. Furthermore, since the beginning of 2024 the bond market, and by association the mortgage market, have analyzed and digested current and future economic conditions, and fixed mortgage rates

have likely been priced into the expected Bank of Canada’s rate cut. As a result, there will be very little downward movement in five-year fixed mortgage rates. There will be some downward movement in variable rates.

With all this economic and resale market data at play, we should anticipate similar sales results in June as we saw in May, with some uptick in sales generated by the psychologically improved outlook generated by the Bank of Canada’s rate cut. Separate and apart from the Bank’s rate cut, we will see positive sales variances month-over- month compared to 2023 as we move into the second half of 2024. This is due to the dismal results achieved by the resale market from July through to the end of last year. If the Bank continues with a further rate cut in July the second half of 2024 be substantially stronger than the first half of this year.



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This website may only be used by consumers that have a bona fide interest in the purchase, sale, or lease of real estate of the type being offered via the website. The data relating to real estate on this website comes in part from the MLS® Reciprocity program of the Toronto Regional Real Estate Board. The data is deemed reliable but is not guaranteed to be accurate.