December 2023: The Month of ‘Wait and See’

People often wish for the new year to bring about optimism and hope as we reflect back on the past twelve months and look ahead at what’s to come. This is most definitely the wish for those in the Toronto Real Estate market as we take a look at the numbers for last month and hope 2024 ushers in a more positive outlook for the market.

In the GTA home prices and the number of sales was up compared to December 2022, unfortunately that’s not saying much considering November through January last year were the lowest prices fell to since pre-COVID, but at least we’re trending in the right direction. When we look at Central Toronto specifically, we actually see prices were down from last year but sales volume was still up significantly, especially amongst detached houses. We’re far too early to point to signs of a rebound, but what this does signal is that consumer confidence is starting to return to the market.

Luxury Real Estate in Toronto for December 2023 echoed the rest of the market, however, sales were arguably more disappointing with most sellers waiting for the market to improve, or listing and hoping to get their number in a market heavily favouring buyers. We also saw a number of new listings launched last month in the hopes of attracting buyers trying to get in under the wire to save on the new Municipal Land Transfer Tax for Toronto, which increased for residential properties over $3,000,000 as of January 1st, 2024 (see rates for 2024 below).

Rosedale did not have one sale in the month, the last being November 3rd. Lawrence Park only saw one sale but at least it was above the average price for the year. Forest Hill had five sales – better than last December’s three, but the selling prices were unfortunately well below 2022’s average for the area. It is often hard to compare and make assumptions when these areas only had single digit home sales, but generally there was a ‘wait and see’ attitude amongst buyers in the luxury space in Toronto.

The larger conversation is what we have been discussing for several months, and that is the market won’t see a strong resurgence until the Bank of Canada starts to cut interest rates, or at least signals that rate cuts are coming. Most buyers are not interested in spending significantly on a purchase now if they expect it will be cheaper to finance that purchase in the near future, despite the fact that prices are almost guaranteed to be lower now than they will be when rates do fall.

The exception to this is in the luxury market where we tend to see purchases mostly being in the want rather than need category, which offers more flexibility of course. But these types of buyers are also keen and considering houses in Toronto’s luxury neighbourhoods have been priced far above market price, it makes sense that they’re willing to wait and see what happens.

Depending on who you ask it seems like we’ll get 0-3 rate cuts by the end of the year, with reality most likely falling somewhere in the middle. Those working in real estate have been quite dovish lately announcing that we are almost guaranteed to see extensive rate cuts, the first being as early as this spring, whereas others tend to be more hawkish. Of course, it’s by no means self-serving for those in real estate to be prophesying rate cuts right around the corner…

We at Glenhome tend to be more conservative and don’t make any promises we can’t back up, but our best guess is that we’ll most likely see at least one, if not two, cuts by the end of 2024. Perhaps we could see one in the Spring but we’re not prepared to make any assumptions yet.

What this means is that there’s no rush to jump into the market right now, but if you’re thinking of listing or buying we highly suggest starting to get organized now so that if and when the market does rebound, you’re ready to take full advantage and not miss out. If you’re looking for any advice of course don’t hesitate to reach out and we’d be more than happy to provide a consultation!

All the best,

Joe


MARKET COMMENTARY BY JOSEPH ROBERT, BROKER OF RECORD & JR ROBERT, SALES REPRESENTATIVE

Source
Toronto Real Estate Board December 2023 Market Watch Report: Read Here