A Look at the Toronto Real Estate Market Today

The Bank of Canada (BoC) kicked off its easing cycle this summer, lowering interest to below the five percent policy rate. This comes after the central bank’s tightening cycle hardly made a dent in one of the world’s largest and most expensive housing markets. As the Canadian economy embarks upon a new monetary policy era, prospective homebuyers might wonder when the best opportunity would be to purchase a residential property in this climate before prices surge even more. Sellers might be enthusiastic that the Bank of Canada’s newest efforts could stimulate demand and bolster home prices. Industry observers are wondering if there is anything that could eradicate demand and crash prices.

Indeed, North America’s fourth-largest city might be made from Teflon since conditions generally remain bullish after more than two years of high interest rates. Now that a lower-rate climate and a slowing economic landscape are upon the Canadian real estate market, what is next for buyers, sellers, and everyone in between?

After the latest market data, the public has four questions that need to be answered:

1. Are Real Estate Prices Dropping in Toronto?
2. Is Toronto Real Estate Cheaper Than Vancouver?
3. Will Toronto Real Estate Keep Going Up?
4. What is the Best Month to Buy a House in Toronto?

So, let’s explore these questions one by one.

A Look at the Toronto Real Estate Market Today

Here is a look at these four critical questions:

Are Real Estate Prices Dropping in Toronto?

According to the Toronto Regional Real Estate Board (TRREB), the average selling price for a home in Toronto dipped 0.8 per cent from the same time a year ago, sliding below $1.075 million in August. Home sales tumbled more than five percent year over year, totalling 5,251 transactions.

“The Bank of Canada’s rate cut announced on September 4 will lead to a further improvement in affordability, especially for those using variable rate mortgages. First-time buyers are especially sensitive to changes in borrowing costs. As mortgage rates continue to trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market,” said Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.

Is Toronto Real Estate Cheaper Than Vancouver?

Like Toronto, the Vancouver real estate market is one of the most expensive sectors in the world. But is it more expensive or more affordable than Toronto?

The Home Price Index composite benchmark price for homes in the Vancouver housing market tumbled 0.9 per cent in August from a year ago, dipping below $1.12 million, according to the latest data from the Greater Vancouver REALTORS (GVR). On a month-over-month basis, Vancouver home prices dropped 0.13 per cent. Demand cratered in August, plummeting more than 17 per cent year-over-year, with home sales totalling 1,904 units.

In the end, Vancouver is slightly costlier than Toronto, but the difference is negligible.

Will Toronto Real Estate Keep Going Up?

A combination of lower mortgage rates and new federal mortgage rules has sparked concern among first-time homebuyers that Toronto real estate prices will begin going up again. Indeed, TD Economics crunched the numbers and showed that the new 30-year mortgage amortization period could lower the down payment on a $1.2 million detached home in Toronto to $95,000, down from the previous $240,000.

“The federal measures should help unlock powerful gains in Canadian sales and average home prices across Canada in the first half of 2025,” said TD economist Rishi Sondhi. “However, part of this story will be that some activity that would’ve taken place this year is pushed into 2025, as buyers wait for the new rules to commence before purchasing.”

So far, Toronto’s home prices have yet to respond to the latest developments, and many views about the city are mixed, heading into 2025.

Supply has modestly improved, with new listings climbing 1.5 percent year-over-year to 12,547 units in August. This tepid supply injection, says Jason Mercer, the chief market analyst at TRREB, should allow price growth to be “moderate.”

“As borrowing costs trend lower over the next year-and-a-half, home buyers will initially benefit from both lower monthly mortgage payments and lower home prices,” Mercer stated. “Even as demand picks up, especially in 2025, it will take time for the inventory of listings to be absorbed. Ample choice in the market will help keep price growth moderate, at least in the initial phases of recovery.”

At the same time, one corner of the Toronto real estate market could put downward pressure on prices: condos. Over the last year, there have been “mounting condo inventories” across the city, which could turn out to be a boon for first-time homebuyers, says RBC Economics.

“We expect mounting condo inventories will put downward pressure on prices in the near term,” the bank’s economists wrote in a report this past summer. “Recovering demand later this year and into 2025 should contain that soft patch.”

At the same time, the report noted that “it will take deeper rate cuts” by the Bank of Canada “to meaningfully reduce ownership costs and stimulate homebuyer demand more broadly.”

TD Economics presented a similar forecast, noting that an oversupply of condos will keep home price growth “subpar through next year.”

“Putting all the pieces together, condo valuations will likely continue declining, keeping home price growth in Toronto and (by extension) Ontario subpar through next year,” TD’s Sondhi stated. “The result will be average home prices that record below-average gains in 2024 and 2025. However, there are risks to this forecast on both sides.”

What is the Best Month to Buy a House in Toronto?

There has been quite a debate in the housing industry as to when is the best time to acquire a home, be it in Toronto or elsewhere in the Canadian real estate market.

The two months that are typically cited are January and August.

Here is what CIBC stated about why January is an optimal month for market participants:

“January is the best time to make an offer on a home. Not many buyers want to brave the cold to shop for a home, so prices are the lowest. Properties also take longer to sell. This means sellers are more likely to accept a lower offer.

The market picks up from February onward. Spring is the busiest time of year to buy a home. More properties become available, prices go up and competition increases. Homes also look more presentable in spring. Buyers often purchase in the spring so they can move into their new home during the summer.

House prices peak in the hot season, especially in June and July. By fall, prices usually drop, and so does the number of listed homes. The market often freezes in December, partially because of the holidays.”

What about August? The primary reason is that this is the final month of the period where listings are most abundant, as peak supply occurs between June and August.

What Now?

As the Canadian real estate market looks ahead to 2025, buyers, sellers, real estate agents, and policymakers will assess plenty of other aspects. The next calendar year will be a fascinating time to monitor from population levels to inventories to new housing construction.