The Toronto real estate market is currently tilted in favour of buyers. The number of new listings is outpacing sales, creating a surplus of properties on the market. This shift means buyers have more options and greater negotiating power than in previous years.
Toronto Condo Prices Finally Falling
The various segments of Toronto’s real estate market have shown divergent trends in August 2024:
- Condos: After maintaining stability throughout the summer, condo prices in Toronto have finally taken a dive in August. Prices have now fallen below their 2022 lows, retreating to levels last seen in Spring 2021.
- Detached Homes: The price of detached homes has leveled off in August, indicating a potential stabilization in this segment.
- Semi-Detached Homes: Prices have come down by 3% in August, showing a more moderate decline compared to previous months.
| Type | Aug 2023 | Aug 2024 | Change |
|---|---|---|---|
| 416 Detached | $1,635,145 | $1,692,239 | +3% |
| 416 Semi | $1,235,723 | $1,204,678 | -3% |
| 416 Condo | $724,549 | $681,835 | -6% |
| 905 Detached | $1,361,943 | $1,336,427 | -2% |
However, the weak buyer’s market and highly negative cash flows for investors are worrying signs that the condo market might be heading into a recession.
This could be tough to bounce back from, and it raises questions about how long investor-owners can hold out under these conditions.
Understanding Toronto Real Estate Market Dynamics Through the SNLR
| Aug 2023 | Aug 2024 | Change | |
|---|---|---|---|
| Average Price | $1,083,026 | $1,074,425 | -1% |
| Sales | 5,262 | 4,975 | -5% |
| New Listings | 12,317 | 12,547 | +2% |
| SNLR | 43% | 40% | -7% |
The sales-to-new-listings ratio (SNLR) helps gauge market balance.
With more Toronto homes being listed than sold, the balance between supply and demand in the Toronto housing market stays steady, shown by the SNLR.
- Seller’s Market (SNLR above dotted line): Demand exceeds supply, leading to competition among buyers and price increases.
- Buyer’s Market (SNLR below dotted line): Oversupply gives buyers negotiating power and may result in lower prices.
- Balanced Market (SNLR at dotted line): Supply and demand are in equilibrium, leading to stable prices at around 60% in the Toronto real estate market.
What To Expect In The Short To Medium Term
In August 2024, 70% of homes in Toronto sold for less than their asking price, highlighting that it’s currently a buyer’s market. With more homes available than buyers, those looking to purchase have the upper hand and can negotiate better deals.
Looking ahead, the market might tighten up a bit, similar to last year. If the usual fall trend continues, we might see a small increase in prices, especially since interest rates are expected to continue to trend down. However, with still high interest rates and slow economic growth, we don’t expect big price jumps right away.
But for a more significant price boost, we’re likely to see that in early 2025, when interest rates are actually going to be lower and the market typically picks up.
How We Can Help
Right now, the market is better for buyers than it was a year or two ago. However, trying to time the market or expect quick price jumps can be risky, especially with the recent fluctuations in interest rates.
Instead, the best strategy is to invest in real estate for the long term and focus on rental income. Look for properties that at least cover their costs and outgoing payments (we call this at last “cash flow neutral”), which is still possible today. Even if prices don’t change much in the short term, a property that generates steady rental income in a strong market like Toronto can be a solid investment. And if rates drop, prices might even go up—a nice bonus.
If you’re thinking about investing in a multiplex in Toronto, we can help! Whether you’re looking for a ready-to-go property or want to convert a single-family home, we’ll guide you through every step.
Ready to start investing in Toronto real estate? Click on the link below to book a chat with us!
