Introduction
Is Toronto real estate as bad as it gets or will it get worse?
Toronto real estate data just came out for November and we want to share some quick insights with you, do a quick wrap up of what happened since the rate hikes, and share things that have been changing more recently.
Based on all of this, we’ll walk through how all of this positions us for 2024 in the world of Toronto real estate.
Bond Yields & Toronto Real Estate Prices
Right now, the real estate scene is a bit slow. Affordability seems to be at its lowest point, and the Bank of Canada rates are likely at their peak. On top of that, the usual holiday slowdown might cause prices to hit their lowest in the next few weeks over December and early January.
Here’s an interesting tidbit: even though fixed rates have been dropping, prices haven’t really adjusted because there’s not much happening in the market. If you check out the 3-year bond yields, they’ve fallen by almost 90 basis points, undoing most of the “higher for longer” sentiments that led to higher fixed rates since early summer.
This takes us back to what we expected after the Bank of Canada’s bold moves in the summer of July 2022.
How fixed rates work is that they closely follow bond yields and go up quickly with them. However, banks tend to move a bit slower as they gradually track bond yields.
Right now, the best 3-year fixed rates we’re seeing are at 5.43%, but there might be room for them to go lower. Once we hit the levels fixed rates are meant to be at, we’re likely to settle at prices that we saw between July 2022 and early June 2023 before the bond yield adjustment.
If we look back, when the market regained confidence in the spring of 2023, Toronto real estate prices reached highs of $1.15 million from February to June.
On the flip side, when things were more uncertain with high and growing inflation, along with strong GDP numbers from July 2022 to January 2023, the Toronto real estate average price lows were at $1.07 million.
Right now, the sales to new listings ratio is telling us that the current real estate market is the weakest it’s been since the ’90s. However, sellers haven’t moved much, so prices haven’t come down much since the major drops in 2022.
Where Are Toronto Real Estate Prices Headed?
So, with all of this in mind, here’s the million-dollar question – or maybe even more, considering it’s real estate: where are prices headed now?
In the short term, with the holiday slowdown, we won’t be surprised to see a bit more room for prices to ease off over December and early January.
However, we do anticipate more activity in 2024. The next move in 2024 after that looks more likely to be up than down.
Toronto Real Estate Investing Focus For 2024
We’re keeping a close eye on the possibility of a recession in 2024, which might throw things off a bit. So, we’re not expecting prices to skyrocket.
You could say we’re cautiously optimistic for 2024. However, what we will do is shift our focus to more recession-resistant types of properties:
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Residential over commercial: This is a no-brainer, as businesses and office spaces are likely to take a bigger hit than homes that people need to live in.
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More diverse economies like Toronto: These seem to be more resilient lately since jobs aren’t concentrated in a single sector.
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Lower-priced homes: They always see better demand, especially during uncertain economic times.
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More affordable types of rental units: Again, aiming for properties that cater to a broader range of budgets: more bedroom over less bedrooms and multi-family homes over luxury condos.
How We Can Help
Finishing up, whether you’re exploring the Toronto real estate scene or getting ready during the quiet holiday season before the market picks up in 2024, we’re here for you.
Reach out for a free call to kickstart your journey into Toronto real estate investing!
