Introduction
The Toronto real estate market continues to trend deeper into a buyer’s market this July – no big surprise there.
But here’s where it gets interesting: while houses have seen significant price drops over the past two months, Toronto condos are showing much weaker signals, yet condo prices haven’t budged.
So, is the house market weaker than the condo market? Not exactly.
Toronto houses have been more reactive to the weaker conditions, but they are actually a lot lower risk after the fact. This means condos are the opposite, much riskier lately. Let’s break it all down.
Market Dynamics: Houses vs. Condos
| May 2024 | Jul 2024 | Change | |
|---|---|---|---|
| Average Price | $1,165,691 | $1,106,617 | -5% |
| 416 Detached | $1,826,370 | $1,648,021 | -10% |
| 416 Semi | $1,416,496 | $1,254,280 | -11% |
| 416 Condo | $767,064 | $748,330 | -2% |
When you compare sales to new listings, this number is getting lower and slower, indicating a deeper buyers’ market. House prices have dropped around 10% from May to July because of this weaker market.
The situation actually looks worse for condos, but prices haven’t really taken a big hit here yet. It seems like condo sellers are trying to hold on to higher prices, and that’s why many condos are just sitting on the market. Realistically, to balance out sales to new listings, prices will have to fall more. This very low number is probably foreshadowing what’s coming – just delayed.
Seller Realism and Market Reactions
House sellers seem a lot more realistic about current conditions and are willing to lower prices to make deals, which is why we’re actually seeing price drops in recent months.
This is important – sales actually went up for detached homes, but there are even more sellers lately, causing this softer market.
Yes, rents have come down from last year, but interest rates are also lower – around 4.6% for the best 3-year fixed as of this week. This translates to some pretty strong cash flows.
Housing Policy and Its Impact
Toronto’s housing policy is also becoming more friendly towards the missing middle – essentially, the government wants to balance out the declining density in low-rise neighbourhoods and encourage home creation here. This is another big factor that will continue to boost the house side.
Nowadays, single-family homes can be converted into four units plus a backyard house as of right on all lots in Toronto. Development charges are being waived, saving up to $250,000 in soft costs. Parking requirements for new units are being eliminated, and height requirements are becoming more lenient.
Here’s the latest exciting potential change: the City of Toronto might start to allow single exits for buildings up to six storeys, which could significantly reduce construction costs.
Looking Ahead: Late Summer and Fall
As we head into late summer and fall, it’s crucial to watch how these factors unfold, especially in the condo market, which might face a deeper recession.
If you are looking to buy, we are entering a time with lower price risk for houses because prices have already adjusted down, cash flows look strong, and future potential looks good.
On the other hand, if you need to sell a condo, you might need to rethink your expectations.
How We Can Help
At our Toronto real estate brokerage, we specialize in helping investors navigate these challenges. Whether you’re looking to sell your Toronto condo, buy a turnkey Toronto multiplex, or convert single-family homes into multiplexes, we’ve got you covered.
Here’s what we offer:
- Personalized Advice: We take the time to understand your goals and offer tailored advice.
- Investment Tips: Learn how to spot good investments and find the perfect investment property for you.
- Renovation Support: Need renovations? No problem – we can connect you with reliable contractors and coach you as you manage the project.
- Property Management: If you want, our team can even handle renting out and managing your property.
Ready to dive in? Click the link below and let’s chat!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
