Breaking Ground or Breaking Down?

In November, the Toronto Metro real estate market remained stable, with seasonal factors driving sales, listings, and inventory, while prices held steady. The rental market showed slight improvement but remains historically weak. New construction sales hit record lows, with declining prices mirroring resale trends, though housing starts and completions remained consistent with historical norms. Mortgage rates were stable with minor shifts, the labor market improved, and housing affordability saw modest gains, driven by higher household incomes.

Toronto Metro sales declined in November to 5,875 but showed a slight increase after seasonal adjustment. This represents a 12% drop from the previous month, a 39% year-over-year increase, and 16% below the 10-year average. Sales typically decrease between October and December.

The number of new listings declined in November, both nominally and after seasonal adjustment, with a 24% drop from the previous month. However, listings were up 10% year-over-year and 12% above the 10-year average. A total of 11,592 new listings marked the highest November total since at least 2006, excluding the pandemic period.

Active inventory declined in November but remained largely unchanged after seasonal adjustment. At 21,818 units, it was down 11% month-over-month, up 30% year-over-year, and 65% above the 10-year average. Active inventory typically decreases from September through December.

The market balance indicator, Months of Inventory, remained unchanged in November. It was 79% higher than the 10-year average, with condos as the weakest sector. Historically, prices tend to increase at an annual rate of 1% with a market balance at this level.

Another market balance indicator, the Sales-to-New Listings ratio, become stronger in October. It was 26% below the 10-year average, with historical data indicating an annual price decline of 5% at this level. Typically, this indicator strengthens after September, reaching its seasonal peak in December.

Like the previous month, November saw mixed price trends, with some metrics rising and others falling. The benchmark price, representing a typical property, edged up 0.1% from the previous month to $1,061,700. Overall, prices were relatively stable year-over-year and remained 17–22% below their 2022 peaks.

The Toronto Metro rental market weakened in November but showed slight improvement after seasonal adjustment for the second consecutive month. The market balance was the second weakest for November since at least 2012, nearing levels seen during the pandemic. Historically, the rental market tends to soften significantly between August and December.

The average rent in the Toronto Metro area slightly declined in October to $2,925. While the average rent was down 3% year-over-year, it rose 0.8% above 2022 levels, driven by an unusual increase in single-family rents. Rent prices typically decline between August and January.

In October, new construction sales were 80% below the eight-year average. Over the past twelve months, sales totaled 10,558, marking a 69% decrease from the historical average. This also represents the lowest total since at least 2016, surpassing the previous record set last month.

In October, the new high-rise benchmark price fell to $1,006,256, reflecting a monthly decline of 1.8%, a yearly decrease of 2%, and an 20% drop from its peak. Meanwhile, the new low-rise benchmark price was $1,549,416, showing a monthly decline of 1%, an annual drop of 5%, and a 20% decrease from its peak value.

Housing starts remained low in October, 19% below the 10-year average. Over the past twelve months, 38,177 units were started in the Toronto Metro area, 3% below the historical average.

Housing completions in October were 4% below the 10-year average, recovering from the previous decline. Over the past 12 months, 42,546 units were completed in the Toronto Metro area, 20% above the historical norm.

Mortgage rates changed slightly in November. The lowest 5-year fixed mortgage rate decreased by 0.05% to 4.04%, while the lowest 5-year variable mortgage rate increased by 0.1% to 4.85%. The gap between the two widened to 0.81%.

Toronto Metro housing affordability improved slightly in November, primarily driven by an increase in household incomes. Covering mortgage payments on a newly purchased property in Toronto Metro requires 54% of a typical household’s income, down from 55%.

Ontario’s unemployment rate fell from 6.9% to 6.8% in October, up 10% from the previous year and 2% above the 10-year average. Nationally, the rate remained unchanged at 6.5%, 2% below the 10-year average. In Toronto, it declined from 7.7% to 7.5%, reaching the lowest level since February 2024.

Ontario’s mortgage arrears rate remained unchanged at 0.16% in August, a 78% increase from the previous year and 50% above the 10-year average. Nationally, the rate also held steady at 0.11%, a 33% increase from the previous year but still 11% below the 10-year average.