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Wondering what’s happening right now in the Toronto real estate market? Here are 5 things you need to know:

1. The Buyers Are Back

For almost 2 years now, Canadians have faced an uncertain real estate market as historically high inflation led the Bank of Canada to increase interest rates ten times. Higher borrowing costs led to slowing consumer demand, which led to lower home prices… exactly what the government set out to do. 

But here’s the thing about real estate market fluctuations caused by economic factors like interest rate hikes: they change the timing of when people decide to buy or sell – they don’t change the need to buy or sell. 

Over the last 20 years, the Toronto Real Estate Board has recorded an average of 88,791 homes sold per year. In 2023, there were only 65,936 homes sold – a full 25% less than the 20-year average. But the buyers and sellers of those 23,855 homes didn’t just vanish – most simply decided to wait for better economic conditions. 

The family that had baby number 3 in 2023? They still need to move from their 900 sqft condo to a bigger house. It’s the same story with first-time buyers, upsizers, downsizers, and yes, even investors – their real estate goals didn’t change – but their timing did.  

Lifestyle needs, demographics and immigration are the true drivers of the real estate market in the long term – not the economy. Economic factors just influence when those moves happen.  

And with better economic conditions now on the horizon (🤞), the influx of home buyers in Toronto has already begun. 

2. Bidding wars are back too. 

To be completely honest, even experienced real estate agents are surprised by how fast and fierce bidding wars are right now. 

In central Toronto, in the first 3 weeks of February 2024:

  • 62% of houses sold above the asking price
  • the average house sold for 107% of the asking price
  • ⅓ of houses sold for more than 115% of the asking price
  • 4 houses sold for more than $400,000 above the asking price

Meanwhile, the condo market is coming back to life, albeit more slowly. While only 20% of condos sold above the asking price this month, condo listings that languished in the fall market are suddenly being scooped up. Hot properties in hot buildings and neighbourhoods are selling quickly. 

3. Smart homebuyers (who have the $$) are seizing the opportunity to buy a property before interest rates drop. 

While a lot of home buyers are waiting for interest rates to drop, those who can weather higher rates in the short term are choosing to buy now. Our clients tell us:

  • They’re hoping to avoid competing with all the buyers they expect to enter the market when rates decrease;
  • They think prices will increase quickly in the next 6-12 months and are hoping to buy at a lower price now. Remember: You date the interest rate; you marry the price (in other words, interest rates are short-term; the price you pay is locked in forever). 
  • They’re tired of waiting! Lifestyle needs are a bigger priority than interest rates. 

4. The best time to list your home for sale was yesterday; the next best time is tomorrow. 

Don’t worry…there wasn’t really anything magical about yesterday, and tomorrow will probably be unremarkable. But when you’re buying or selling a home, the benefits of certainty – knowing the exact conditions of the market –  are significant. Remember: there’s no such thing as ‘timing the market’ – the people who brag about buying low and selling high? They got lucky. 

(That’s not to say that staying informed isn’t really important – because it is – so please keep reading this blog, lol) 

5. Interest rate cuts are coming 

Lower-than-expected inflation in January 2024 is now pointing to an imminent cut to interest rates, with economists predicting it could happen as early as June 2024.

Advice for Buyers

  • If you have the financial means to buy at current interest rates, consider making a move ASAP. When interest rates fall, there will almost certainly be a big influx of new buyers competing for properties. If you want to avoid even fiercer bidding wars and higher prices, the time is probably now. 
  • With the condo market recovering at a slower pace than the market for houses, there are some great deals out there right now. Look for properties that have been listed for more than 60 days and haven’t had a price decrease in the last 30 days. 
  • Choose your REALTOR carefully – you’ll need someone experienced in strategically navigating a heated market if you want to get the house you want. 
  • Make sure you’re working with a great mortgage broker who can help you navigate the current borrowing options. Shorter-term fixed-rate mortgages are worth exploring. 

Advice for Sellers

  • If you want to sell your home in 2024, it’s time to get ready. Historically, homes listed between February and May sell for a higher percentage of the asking price than the rest of the year. Bumps in activity and prices – like what we’re seeing right now – don’t always last. 
  • The number of homes for sale in Toronto is historically highest in May-August, so if you’re hoping to avoid competing for buyers with too many other homes, consider listing before the spring. Fewer homes for sale + motivated buyers = $$$.
  • Choose your REALTOR wisely. Even in a hot market, digital marketing, staging and strategic pricing are still key to maximizing the sold price. 
  • Should you buy or sell first in this market? It totally depends on your situation, neighbourhood and the type of home you own and want to move into. Talk to your REALTOR.

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