September 20th, 2023 | Uncategorized

Fall and Winter Markets: What Awaits the Toronto Real Estate Market?

The Toronto Real Estate Market has been on a roller coaster ride for most of the year. Homeowners, renters, and industry professionals alike have been keenly watching the market’s fluctuations, trying to predict its trajectory. Recent developments from the Bank of Canada (BoC) and Toronto Real Estate Board (TREB) data are providing some clues as to what’s in store for us as we head into the colder months.

Here’s what we’ve gleaned:

• BoC’s Big Announcement: On September 6, the BoC announced its decision to pause any increase in rates – but only “for now”. This subtle hint towards future actions is what caught the attention of many, including every keen Toronto Realtor.
• Market Rebound Talks: Post the BoC announcement, many Realtors and industry professionals have been buzzing about a potential market rebound. They believe that selling a house in Toronto might become easier with this move, signaling the onset of a robust Fall Market. But is this claim accurate?
• Optimism Vs. Reality: While optimism is essential, especially in industries as volatile as real estate, it’s also crucial to separate facts from fables. Some of the messages being spread about the market’s future might be overblown or even misleading.
• Historical Patterns and the Real Story: Earlier this year, in January, a similar BoC announcement was made. The Real Estate Market seemingly sprung back to life, primarily due to the super low inventory back then. Buyers, thinking this was the turnaround, began buying a house in Toronto en masse. However, this surge was transient. By May and June, a clear deceleration in market activity was apparent. Prices and sales started their month-over-month decline.
• The Recent Data: This fall, even after the BoC’s decision to hold rates, TREB data showed a discernible decline for the third consecutive month in both prices and sales. Moreover, August observed a year-over-year inventory surge of 16.2%. Such an inventory spike during a typically slow period (dead of summer) is noteworthy and indicates underlying changes in the market dynamics.
• Expert Opinions: When Bloomberg asked BMO’s economist, Robert Kavcic, about the potential for price spikes similar to earlier in the year, the response was clear. He cited three major reasons we shouldn’t expect such a surge:
  1. Unemployment is on the rise.
  2. There’s a notable increase in inventory.
  3. Higher rates (instigated by higher bond yields) are reducing demand and making homes less affordable.

As we venture deeper into the Fall and Winter seasons, the Toronto Real Estate Market is likely to witness a plateau. Both selling a house in Toronto and buying one might pose unique challenges. While it’s always advisable to be optimistic, it’s equally crucial to be well-informed. As we transition into 2024 and await the Spring market, all eyes will remain fixed on how the Real Estate landscape evolves in our city.