Market Report | May 2024

TORONTO, ONTARIO, June 5, 2024 – May home sales continued at low levels, especially in comparison to last spring’s short-lived pick-up in market activity. Home buyers are still waiting for relief on the mortgage rate front. Existing homeowners are anticipating an uptick in demand, as evidenced by a year-over-year increase in new listings. With more choice compared to a year ago, buyers benefitted from more negotiating room on prices. "Recent polling from Ipsos indicates that home buyers are waiting for clear signs of declining mortgage rates.

As borrowing costs decrease over the next 18 months, more buyers are expected to enter the market, including many first-time buyers. This will open up much needed space in a relatively tight rental market," stated Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.

Greater Toronto Area REALTORS® reported 7,013 home sales through TRREB’s MLS® System in May 2024 – a 21.7 per cent decline compared to 8,960 sales reported in May 2023. New listings entered into the MLS® System amounted to 18,612 – up by 21.1 per cent year-over-year. The MLS® Home Price Index Composite benchmark was down by 3.5 per cent on a year-over-year basis in May 2024. The average selling price of $1,165,691 was down by 2.5 per cent over the May 2023 result of $1,195,409. On a seasonally adjusted monthly basis, the average selling price edged up slightly compared to April 2024.

“While interest rates remained high in May, home buyers did continue to benefit from slightly lower selling prices compared to last year. We have seen selling prices adjust to mitigate the impact of higher mortgage rates. Affordability is expected to improve further as borrowing costs trend lower. However, as demand picks up, we will likely see renewed upward pressure on home prices as competition between buyers increases,” said TRREB Chief Market Analyst Jason Mercer.

“In order to have an affordable and livable region over the long term, we need to see a coordinated effort from all levels of government to alleviate our current housing deficit and to provide housing for new population moving forward. On top of this, governments need to ensure the delivery of infrastructure to support our growing population. The economic health and liveability of our region depends on the timely completion of public transit projects including better transparency and clear timelines on the completion of the Eglinton Crosstown LRT,” said TRREB CEO John DiMichele.

Five Key Takeaways from May’s market report

1. Market Activity and Home Sales: In May 2024, home sales continued to remain at low levels, reflecting a 21.7% decline compared to the same month in the previous year. This decrease highlights the ongoing hesitation among home buyers, primarily driven by high mortgage rates.

2. New Listings and Market Choices: Despite the decline in sales, new listings saw a year-over-year increase of 21.1%, providing buyers with more options and greater negotiating power. This increase in supply is a positive indicator for prospective buyers looking for better deals.

3. Price Trends and Affordability: The MLS® Home Price Index Composite benchmark experienced a 3.5% decline on a year-over-year basis, with the average selling price down by 2.5% compared to May 2023. However, on a seasonally adjusted monthly basis, the average selling price showed a slight increase from April 2024.

4. Future Market Expectations: Polling from Ipsos indicates that many potential home buyers are waiting for clear signs of declining mortgage rates. As borrowing costs are expected to decrease over the next 18 months, a surge in market activity is anticipated, particularly from first-time buyers. This influx is likely to alleviate some pressure in the tight rental market.

5. Government Role and Infrastructure Needs: Long-term affordability and livability in the region depend on a coordinated effort from all levels of government to address the housing deficit and support infrastructure development. The timely completion of public transit projects, such as the Eglinton Crosstown LRT, is crucial for sustaining the economic health and liveability of the region.

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