We are already more than halfway through the end of the first quarter of 2024, and housing activity in the Greater Toronto Area (GTA) is picking up at a faster-than-expected rate, outpacing most market predictions released last year and earlier this year.

The Toronto Regional Real Estate Board (TRREB) has also recently released an exhaustive report that includes market forecasts for the year ahead and some insightful observations on the current market conditions in the GTA. As expected, the country’s continuing housing crisis remains top of mind for most Canadians. The report points to the failure to build new housing at a rate that keeps pace with demand as a key contributor to the current state of affairs. It also cites a recent Canada Mortgage and Housing Corporation (CMHC) report, which estimates that an additional 3.5 million homes are needed by 2030 to restore housing affordability.

Here are some key takeaways from the TRREB report.

A quick look back at 2023

Sales, prices, and new listings in 2023 were down, compared with 2022.

  • Home sales dropped 12.1% from 75,047
  • New listings in 2023 slipped 8.6% to 142,233
  • Average price of $1,126,604 for all home types fell 5.4% from $1,190,749

2024 home sales will outpace 2023 sales

The TRREB report predicts GTA home sales will touch 77,000 this year, a substantial improvement over the less than 66,000 transactions seen in 2023. It also projects the average selling price to hover around $1.17 million in 2024, which would still be below the highs seen in 2022.

Surge in housing demand and supply

A homebuyers survey conducted by Ipsos for TRREB pegged the share of likely homebuyers for 2024 at 28 percent, the same as 2023. However, the percentage of people who said they were very likely to purchase dipped by two percent to nine percent. The survey attributed this to “heightened market uncertainty as it relates to borrowing costs and the economy in general.” The widely expected rate cuts later this year should help push down borrowing costs and fuel housing demand. Housing supply will also improve with new listings forecast to touch 150,000, driving up selling prices by about four percent.

Mortgage rates will continue to impact demand

The direction of mortgage rates will remain a key determinant of housing market conditions in 2024, according to TRREB. Rising/high borrowing costs significantly held back buyers in 2023, and many respondents in a TRREB-Ipsos survey reiterated that mortgage rates would need to decline noticeably before they would consider entering the market.

 

 

Higher immigration will drive up housing demand

Higher immigration will continue to drive demand for housing—both rental and ownership—during the next few years. The Ipsos survey findings also confirmed a higher propensity among immigrant households to buy homes, compared with people born in Canada. Overall, nine percent of the respondents said they were very likely to purchase a home in 2024. However, 21 percent of respondents who immigrated to Canada during the past decade said they were very likely to purchase a home in 2024. Most of these recent immigrants (68 percent) would also be first-time buyers.

Housing supply shortfalls will remain an issue

According to the report, the lack of housing supply in the GTA and southern Ontario more broadly is well-documented. The TRREB does not see new listings increasing substantially over the coming months, which will continue to impact the housing market. As per the results of the Ipsos survey, the number of homeowners likely (very likely or somewhat likely) to list their homes for sale in 2024 slipped two percentage points to 37 percent. Those who indicated they were very likely to list dropped by four percent to 14 percent.

Affordability continues to be a major concern

Survey respondents who plan to list their property for sale this year indicated several factors influencing their decision, such as wanting to upsize, downsize, retire, or choose to live closer to work. Compared with 2022, affordability concerns related to higher mortgage costs were also a key reason driving homeowners’ decision to sell. New research by the Canadian Centre for Economic Analysis (CANCEA) cited in the report reveals:

  • A household is living unaffordably if it spends more than 30% of its income on housing.
  • Households spending over 50% of their income on housing had a low well-being score of 6.79/10.
  • The social value cost attributed to housing unaffordability was about 1.75 times greater than that of cancer in the GTA.

As with any market forecast or analysis, we would suggest that you consider the information we have shared today keeping in mind your real-estate goals for 2024. As always, the RE/MAX Royal Team Sachdeva Realty team is available to assist you with any additional information you may need to help you consolidate your home buying or selling plans this year. So please do not hesitate to get in touch!