Spring Without Lift-Off

Toronto Metro’s housing market remained weak in April, with sluggish sales, elevated new listings, and active inventory hitting a record high. Market conditions worsened, particularly for condos, as key market balance indicators hit their weakest levels for April since at least 2006. Home prices showed mixed trends, while the rental market softened. New construction faced challenges as sales hit historic lows and housing starts declined, though completions surged. Mortgage rates edged up, but affordability improved due to declining home prices.

Toronto Metro sales rose to 5,601 in April but remained largely unchanged after seasonal adjustment, marking the weakest April level since at least 2006, excluding the pandemic period. This represented a 12% month-over-month increase, a 21% year-over-year decline, and a level 34% below the 10-year average. Sales typically rise between January and May.

New listings rose in April to 18,836 – up 9% month-over-month, 11% higher year-over-year, and 15% above the 10-year average. The monthly change was mostly in line with seasonal patterns, as new listings typically rise between January and May.

Active inventory continued to grow in April, reaching 27,386 units – the highest level for this month since at least 2006. It was up 17% month-over-month, 51% year-over-year, and 79% above the 10-year average. Active inventory typically increases between January and May.

The market balance indicator, months of inventory, weakened slightly in April to 4.9. It stood 129% above the 10-year average, with condos as the weakest segment. Historically, this level has aligned with a 16% annual price decline.

Another key indicator, the sales-to-new listings ratio, edged up slightly to 0.3, remaining 43% below the 10-year average. Historically, this ratio has corresponded with an annual price drop of 17%.

Price metrics were mixed in April. The benchmark price, representing a typical property, declined 5.5% month-over-month to $1,009,400, while the median and average prices slightly increased. Benchmark price fell 11% year-over-year and was 24% below the 2022 peak. The monthly change in the Benchmark Price was unusually large, so it should be interpreted with caution.

Toronto Metro’s rental market strengthened in April but weakened after seasonal adjustment. The months-of-inventory indicator, which reflects market balance, was 31% above the 10-year average. This marked the weakest reading for April since at least 2012, excluding the pandemic. Historically, the rental market tends to strengthen between January and August.

In April, the average rent in Toronto Metro slightly increased to $2,803, down 3.9% year-over-year and 10% below the 2023 peak. Rent prices typically rise between January and August.

In March, there were 385 new construction units sold, 87% below the nine-year average. The 12-month total fell to 8,055 units, a 73% drop from the historical norm. This marks the lowest level of annual sales since at least 2016 and the eleventh consecutive month of new record lows.

In April, the high-rise benchmark price slipped 0.1% month-over-month to $1,020,864, marking a 3% decline year-over-year and staying 18% below its peak. Meanwhile, the low-rise benchmark price fell 0.3% month-over-month to $1,532,279, showing a 4% drop from the previous year and remaining 21% below its peak.

Construction began on 1,225 housing units in March, 61% below the 10-year average. Over the past year, 30,642 units were started in Toronto Metro, 23% below the historical average.

Housing completions spiked sharply in March, reaching 5,725 units – 56% above the 10-year average. Over the past 12 months, a total of 39,780 units were completed, standing 12% above the historical norm.

April saw the lowest 5-year fixed mortgage rate rise 0.15 percentage points to 3.84%, while the lowest 5-year variable rate increased 0.05 percentage points to 3.95%. The gap between the two narrowed to 0.11 percentage points.

Housing affordability in the Toronto Metro improved in April, primarily due to a significant drop in benchmark price. Covering mortgage payments on a newly purchased property now requires 50% of a typical household’s income, down from 52% previously.

In March, Ontario’s unemployment rate increased to 7.5%, reflecting a 12% annual rise and standing 12% above the 10-year average. Nationally, the rate climbed to 6.7%, exceeding the 10-year norm by 1%. In Toronto, the unemployment rate rose to 8.7%, standing 18% above the 10-year average.

In January, Ontario’s mortgage arrears rate remained at 0.19%, reflecting a 46% year-over-year increase and standing 77% above the 10-year average. Nationally, the rate stayed at 0.22%, marking a 22% annual rise but remaining 1% below the 10-year average.