The real estate market in Canada, particularly in the Greater Toronto Area (GTA), has seen significant shifts in recent months, driven by fluctuating interest rates and changing buyer dynamics. As we move through 2024, the market is showing some promising signs, particularly for home buyers.

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Home Sales Hit 7-Month High in Canada

In August 2024, home sales across Canada rose by 1.3%, hitting a 7-month high. This uptick coincides with the Bank of Canada's decision to lower interest rates in June, July, and September, with more cuts expected into 2025. As rates fall, buyers' purchasing power increases, making homeownership more accessible for a larger segment of the population. The result? More buyers entering the market, driving up sales month over month.

GTA Real Estate Prices Hold Steady

While sales are increasing, home prices in the GTA have remained relatively stable, with slight increases in many areas. Over the past six months, housing prices have risen in most major cities, including Toronto. While some areas, like Regina, saw minor declines, the GTA has experienced steady price growth. However, it remains very much a buyer's market due to high inventory levels. For example, active listings in the GTA increased by 10.5% year-over-year, offering buyers more options and greater negotiation power.

Sales Activity and Price Trends in GTA

The real estate market update for the GTA reveals that sales activity has grown across most property types. Downtown Toronto, for instance, saw a 2.2% year-over-year increase in sales. However, the inventory surplus has led to slight price declines, with the average home price down 1% compared to September 2023.

Despite this, the market shows signs of stabilization, with prices slowly trending upwards from August 2024 to September 2024. As inventory is gradually absorbed, competition among buyers will likely increase, pushing prices up over time.

Affordability Gap Between Housing Types in GTA

One important factor in the real estate GTA market is the growing affordability gap between housing types. As of September 2024, the average price for a detached home in the 416 area stands at approximately $1.68 million, while the average condo price hovers just above $700,000. This significant gap—more than $900,000—makes detached homes unattainable for many first-time buyers, driving demand toward condos.

This shift in buyer behavior is expected to result in increased condo sales and gradual price increases in the coming months. Historically, when the affordability gap widens, buyers opt for more affordable housing types, such as condos and townhomes, further boosting demand in these segments.

What does this mean for Buyers?

With interest rates continuing to drop, it's a favorable time to enter the market as purchasing power increases. The high inventory levels, particularly in the GTA, provide more options and opportunities for negotiation, making it a buyer's market in many areas. As home prices remain stable with slight increases, buyers have a chance to secure properties before prices potentially rise further due to growing competition as inventory is absorbed.

What does this mean for Sellers? 

Sellers are in a relatively balanced position. While prices have remained stable, the high inventory means there is more competition among sellers. However, the steady sales growth and interest rate cuts suggest that the market is heading toward stabilization, with the potential for price increases in the future. For sellers, this might be a good time to prepare for a more competitive environment as the market begins to heat up.