Buyers Are Back

In October, Toronto Metro sales increased while new listings slightly declined, strengthening the market balance. Price changes were mixed, with the rental market weakening and approaching its weakest point in 12 years, while new construction sales hit their lowest level in 12 months, and housing affordability remained unchanged due to higher fixed mortgage rates offsetting lower house prices.

Toronto Metro saw a significant jump in sales in October, with a total of 6,658 transactions—up 33% from the previous month, a 43% increase year-over-year, though still 17% below the 10-year average. While October sales growth in Toronto Metro is typical, this year’s increase was notably stronger. Historically, sales tend to decline from October through December.

New listing activity declined in October, both nominally and seasonally adjusted, with a 15% drop from the previous month. Compared to last year, listings increased by 6% and were 12% above the 10-year average. A total of 15,328 new listings were recorded, marking the highest October total since at least 2006, excluding the pandemic period.

Active inventory declined in October but showed a slight increase after seasonal adjustment. At 24,481 units, it was down 4% month-over-month, up 25% year-over-year, and stood 58% above the 10-year average. Typically, active inventory decreases from September through December.

The market balance indicator, Months of Inventory, tightened in October largely due to stronger sales. It was 73% higher than the historical average, with condos as the weakest sector. Historically, prices tend to decline at an annual rate of 1% with a market balance at this level.

Another market balance indicator, the Sales-to-New Listings ratio, also become stronger in October. It was 23% below the 10-year average, with historical data indicating an annual price decline of 6% at this level. Typically, this indicator strengthens after September, reaching its seasonal peak in December.

Similar to the previous month, October saw mixed price changes, with some metrics rising and others declining. The benchmark price, representing a typical property, fell by 0.8% from the previous month to $1,060,300. Overall, prices were relatively unchanged year-over-year and remained 15-21% below their 2022 peaks.

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

The average rent price in the Toronto Metro area declined in October to $2,932. Compared to the previous year, the average rent was down 5.6%, declining by 1% below the 2022 level. The average rent price typically declines between August and January.

In September, new construction sales were 78% below the eight-year average. Over the past twelve months, sales totalled 11,665, marking a 66% decrease from the historical average. This also represents the lowest total since at least 2016, surpassing the previous record set last month.

In September, the new high-rise benchmark price reached $1,025,111, reflecting a monthly decline of 0.6%, a yearly decrease of 1%, and an 18% drop from its peak. Meanwhile, the new low-rise benchmark price was $1,565,116, showing a monthly decline of 2.1%, remaining unchanged compared to last year, and a 19% decrease from its peak value.

Housing starts remained low in August, 51% below the 10-year average. Over the past twelve months, 39,396 units were started in the Toronto Metro area, aligning with the historical average.

Housing completions in September were 32% below the 10-year average, marking the first significant decline in 2024. Over the past 12 months, 42,933 units were completed in the Toronto Metro area, 21% above the historical norm.

An increase in the bond market’s inflation expectations and a 0.5% interest rate cut by the Bank of Canada led to a convergence in the mortgage rates in October. The lowest 5-year fixed mortgage rate increased by 0.15% to 4.09%, while the lowest 5-year variable mortgage rate declined by 0.55% to 4.75%. The gap between those two shrunk to 0.66%.

The decline in the Toronto Metro benchmark price had little impact on housing affordability due to an increase in fixed mortgage rates. Covering mortgage payments on a newly purchased property in Toronto Metro still requires 55% of a typical household’s income, unchanged from the previous month.

Ontario’s unemployment rate fell from 7.1% to 6.9% in September, up 15% from the previous year and 3% above the 10-year average. Nationally, the rate decreased from 6.6% to 6.5%, 2% below the 10-year average. In Toronto it declined from 8.8% to 7.7%, matching July’s level.

Ontario’s mortgage arrears rate rose from 0.14% to 0.16% in July, a 78% increase from the previous year and 49% above the 10-year average. Nationally, the rate climbed from 0.19% to 0.20%, a 33% increase from the previous year but still 11% below the 10-year average..