The Seller’s Rush

Toronto Metro’s real estate market experienced a sharp rise in new listings in January, increasing inventory and weakening market balance indicators despite a modest sales uptick. While conditions typically suggest price declines, overall prices remained stable. The rental market, while remaining weak, showed seasonal improvement, with rent prices continuing to fall. New construction sales hit a record low, while strong housing completions contrasted with a steep drop in starts, raising concerns about future supply. Lower mortgage rates provided slight affordability relief, though housing costs remain well above historical norms. Meanwhile, a strengthening labour market and stable mortgage arrears signalled a steady economic backdrop.

Toronto Metro sales rose in January to 3,847 both nominally and seasonally adjusted. This marked a 15% month-over-month increase, a 9% year-over-year decline, and 17% below the 10-year average. Sales typically rise between January and May.

New listings spiked in January to 12,392, the highest for this month since 2007. This was a 165% month-over-month increase and 49% higher year-over-year, exceeding the 10-year average by 41%. New listings typically rise between January and May.

Active inventory rose in January to 17,157 units, the highest for this month since 2009. It increased 11% month-over-month, 70% year-over-year, and was 81% above the 10-year average. Active inventory typically rises between January and May.

The market balance indicator, months of inventory, declined in January, sitting 99% above the 10-year average, with condos as the weakest sector. Historically, this level aligns with stable prices.

Another key indicator, the sales-to-new listings ratio, also weakened, falling 42% below the 10-year average – the lowest level since 2009. Historically, this ratio suggests an annual price decline of 9%.

January saw mixed price trends, with some measures increasing and others declining. The benchmark price, representing a typical property, rose 0.8% month-over-month to $1,070,100. Overall, prices were relatively stable year-over-year and 20–24% below 2022 peaks.

Toronto Metro’s rental market strengthened in January but remained largely unchanged after seasonal adjustment. The months-of-inventory indicator, which reflects market balance, was 31% above the 10-year average – one of the weakest readings in 12 years. Historically, the rental market strengthens between January and August.

In January, the average rent in Toronto Metro declined to $2,815, down 4.2% year-over-year and 3% below 2022 levels. Rent prices typically increase between January and August.

December’s new construction sales were 81% below the eight-year average, with a 12-month total of 9,379 units – a 72% drop from the historical average. This marks the lowest sales since at least 2016, surpassing last month’s record.

In December, the high-rise benchmark price remained largely unchanged at $1,018,170, down 3% year-over-year and 19% below its peak. The low-rise benchmark price fell 0.4% month-over-month to $1,551,228, down 3% annually and 20% from its peak.

December housing starts were 64% below the 10-year average. Over the past year, 37,718 units were started in Toronto Metro, 4% below the historical average.

Housing completions in December were 31% above the 10-year average, with a 12-month total of 42,442 units, 19% above the historical norm.

In January, the lowest 5-year fixed mortgage rate fell 0.17 percentage points to 3.97%, while the lowest 5-year variable rate dropped 0.25 percentage points to 4.10%, following a 0.25% rate cut by the Bank of Canada. The gap between the two narrowed to 0.13 percentage points.

Housing affordability in Toronto Metro improved slightly in January, driven by lower borrowing costs. Covering mortgage payments on a newly purchased property now requires 54% of a typical household’s income, down from 55%.

Ontario’s unemployment rate fell to 7.5% in December, marking a 19% annual increase and sitting 12% above the 10-year average. Nationally, the rate declined to 6.7%, 1% above the 10-year norm. In Toronto, it fell to 8.6%, still 17% above the 10-year average.

Ontario’s mortgage arrears rate stayed at 0.17% in October, up 55% year-over-year and 59% above the 10-year average. Nationally, the rate rose to 0.21%, a 24% annual increase, but remained 6% below the 10-year average.