I’m always reluctant to draw any conclusions about housing markets based on seasonally low data. More specifically, July-August and December-January typically have suppressed sales volume, so using them to guide decision-making can lead us astray.

Source: TRREB

With that being said, there are a few key things to be mindful of in Toronto Regional Real Estate Board (TRREB)’s most recent Market Watch release:

Home sales are down by 5.3 per cent compared to August last year. This is relatively in line with the declines we’ve seen each month in 2024. As well, homes are taking much longer to sell (40-57 per cent increase in days-on-market).

As a result, inventory continues to accumulate in the absence of absorption, so active listings are up significantly (46.2 per cent). Nominal prices are down slightly (0.8 per cent), so when adjusted for current inflation, real house prices are down over 3.0 per cent since last year.

The fourplex pump

Source: TRREB

When you unpack these data points a little further, you can get a better understanding of the market.

Some things stand out here:

1. Area code 416 detached home sales is the only category posting a YoY increase in number of units sold in August, up 8.3 per cent. It’s also the only category posting a YoY increase in price, up 3.2 per cent.

2. Area code 416 condominiums and townhouses have both seen double-digit drops in volume.

Presumably, the municipality’s upzoning of residential neighbourhoods in Toronto to four units has had some positive impact. A floor on area code 416 detached homes would be established by the last buyer in the market — an investor looking to tear down the home and rebuild a multiplex there. Their output value has now gone from one or two units to four units, as a purchaser can now build a fourplex on detached lots.

In the 905 area code, detached sales appear to be resilient, but less optimistic than in 416. The 905 area code’s detached sales number saw a 3.3 per cent decrease.

The cooling condominium market

Condominium units are a very different story from the detached market. We’ve been hearing alarming reports of condominium volume piling up, with product exceeding 12 months of inventory at some periods.

Condominium apartment sales continue to decline, currently at a rate of 11.4 per cent across the GTA compared to August of last year. This decline is reflected further in the preconstruction condominium sales market, where sales are 50 to 75 per cent below the long-term average.

Declining rents and increasing interest rates have created a difficult cash flow scenario for condominium investors. As a result, many are looking to offload assets, and very few are looking to purchase these assets.

Source: TRREB

Pricing

Prices are down across the board on TRREB. Notably, beyond condominiums, recipients of the pandemic’s urban exodus are seeing a steeper recoil from peak pricing, which seems to correlate heavily with the magnitude of price increases during the exodus.

Source: TRREB

Moving forward

With another 25 basis point rate cut from the Bank of Canada, some pressure has been eased for financial stress on certain sellers. Fixed rates are declining, so there’s a little more light at the end of the tunnel for those facing a steep mortgage payment increase upon renewal in 2025 and 2026.

The bigger question is when interest rate cuts will have a material impact on bringing purchasers back to the market. So far, the impact of 75 bps rate cuts has been relatively muted, as the weight of financial stress seems to outweigh the benefit of lower rates.

A new report from Re/Max Canada reveals that the detached housing market in the Greater Toronto Area (GTA), Greater Vancouver and Fraser Valley is being fueled primarily by investors and move-up buyers.

With first-time homebuyers increasingly priced out of these expensive markets, those looking to upgrade or invest in real estate have become the main drivers of sales activity in the first half of 2024.

‘The first (June’s) interest rate cut did little to incentivize buyers, but the second may have struck a nerve’

“While affordability remains the top obstacle for first-time homebuyers, more experienced buyers and investors are taking advantage of softer housing values, making their moves ahead of the Bank of Canada’s (BoC) end to quantitative tightening,” says Re/Max Canada president Christopher Alexander.

“Pent-up demand continues to build, with an estimated 20,000 to 25,000 buyers currently lying in wait in the GTA, and another 5,000 buyers in the Greater Vancouver area ready to pull the trigger. The first interest rate cut in June did little to incentivize buyers, but early indications show the second may have struck a nerve.”

The Re/Max Hot Pocket Communities Report found that nearly 40 per cent of the surveyed markets (33 out of 83) reported an increase in detached home values in the first six months of 2024, while 30 per cent of markets (25 out of 83) saw a rise in the number of sales. This indicates a robust demand for detached homes, even in the face of affordability challenges.

GTA: Sales momentum and price increases

In the GTA, the 416 area code (encompassing Toronto proper) has shown the strongest sales momentum. Just over 34 per cent of neighbourhoods there either remained stable or experienced growth in detached homebuying activity, outpacing the 905 area code as well as Greater Vancouver and Fraser Valley. This resurgence is particularly notable given the region’s challenging real estate landscape, where high prices have kept many first-time buyers on the sidelines.

Specific neighbourhoods in Toronto have seen notable increases in homebuying activity. Areas such as Dufferin Grove, Little Portugal, Trinity-Bellwoods and Rosedale-Moore Park have all reported significant gains in sales.

On the pricing front, the West End of Toronto has led the way with some of the highest increases in detached housing values. For example, neighbourhoods like Kingsway South and High Park North have seen prices rise by over 7.0 per cent to 9.0 per cent compared to last year.

Greater Vancouver and Fraser Valley: Limited inventory drives price appreciation

In British Columbia, limited inventory has been a critical factor supporting price appreciation in the detached home category, particularly in the Fraser Valley, with over 83 per cent of its local markets reporting an increase in average prices. This is followed closely by Greater Vancouver, where over 70 per cent of neighbourhoods have noted rising median values.

Areas such as Squamish, Burnaby and Port Coquitlam have experienced some of the largest price gains, with median home values increasing by as much as 14.2 per cent. Despite the rising prices, demand remains strong, driven by a combination of local buyers and investors looking to capitalize on the region’s long-term growth potential.

Change in investor activity

The report highlights a notable shift in investor behaviour, particularly in the GTA. Disenchanted with the performance of condominiums, many investors are now turning their attention to detached homes, especially on smaller lots in Toronto’s east end.

A recent report by Urbanation and CIBC Economics found that condominium investors who closed on newly completed units in 2023 faced negative cash flow (of nearly $600 per month), which has prompted many to reconsider their investment strategies.

Affordable housing and the first-time buyer dilemma

While the report highlights significant price appreciation in many markets, it also underscores the challenges facing first-time buyers. Affordability remains a significant barrier, particularly in high-demand regions like the GTA and Greater Vancouver. However, there are still pockets of affordability within these markets.

Regions like Durham in the GTA and the Sunshine Coast in Greater Vancouver offer detached homes priced under $1 million, providing opportunities for those looking to enter the housing market.

The report also calls for policy changes to address the affordability crisis. One suggestion is to extend longer amortization periods (up to 30 years) to resale homes, similar to what is currently available for new construction. While it may not be enough, it could help more buyers qualify for mortgages in high-priced markets and provide some relief to the ongoing affordability challenges.

“All boats rise with the tide — once the first-time buyers segment gains greater traction, we should see a ripple effect,” says Alexander. “We’re not there quite yet, but the tide is beginning to turn … The gap is closing amid growing buyer confidence. The only dark cloud on the horizon is the possibility of a U.S. recession given stock market volatility.”

Alexander stresses that being so closely tied to the U.S. economy, Canada is not insulated, and we can expect buyers to “stay tuned to any possible economic headwinds.”

Review the full report, including market overviews, here.

Last month, Calgary had 2,738 residential sales, 13 per cent less than last year’s record high, the Calgary Real Estate Board (CREB) reports. However, this is over 17 per cent more than long-term trends.

“The pullback in sales reflects supply challenges in the lower price ranges, ultimately limiting sales activity,” says Ann-Marie Lurie, chief economist at CREB. “Inventory in the lower price ranges of each property type continues to fall, providing limited choices for potential purchasers looking for more affordable product. It also continues to be a competitive market for some buyers with over 40 per cent of the homes sold selling over list price.”

Inventory and prices

New listings were also lower in June, which left the sales-to-new-listings ratio at 72 per cent. At 3,789 units, inventory was improved compared to last year, but this is 40 per cent below long-term trends.

Months of supply is relatively higher, at 1.4 months, with rising prices in all districts and conditions favouring sellers. June’s unadjusted benchmark price was $608,000, almost nine per cent higher than last year.

Source: CREB

Detached homes

There was a 16 per cent year-over-year sales drop in detached homes across the city, with new listings 45 per cent below long-term trends for June and 1,775 detached homes in inventory. At $767,600, the unadjusted benchmark price was almost one per cent higher than in May and 12 per cent higher than the year prior.

Semi-detached homes

New listings were low in this property type last month, with the sales-to-new-listings ratio up to 76 per cent for semi-detached homes. With just over one month of supply, inventory remained at about half of what’s typical in June. The unadjusted benchmark price rose one per cent from last month and 12 per cent from last year, reaching $686,100

Row homes

Row home sales slowed in June relative to the past two years, and this property type’s sales-to-new-listings ratio fell to 75 per cent, the lowest June level since 2021. With about one month of supply and an unadjusted benchmark price of $464,600, about 17 per cent higher than last year, conditions are tight.

Apartment condominium homes

791 apartment condominium home sales occurred in June, nearly eight per cent less than last year. This was mainly for lower-priced properties. However, year-to-date apartment sales are up by 13 per cent and at record-high levels. Sales-to-new-listings fell and inventory was up, but mainly in higher-priced properties. Prices increased by over 17 per cent from last year, reaching $344,700. 

Where buyers are going for more affordable homes

Calgary’s market has been going strong, including from a huge amount of interprovincial migration to Alberta last year. That said, it remains relatively affordable compared to other major Canadian markets, and there are several areas in the city where buyers can get a single-family home for $500,000 or less, a recent report from Wahi reveals. This was found in 40 neighbourhoods between January and May this year.

The southwest part of the city is home to the 10 most affordable of the neighbourhoods with two in Northwest Calgary and a third in Northeast Calgary.

Source: Wahi

Bidding wars for Calgary’s single-family homes under $500,000

Despite the relatively lower home prices in some areas, about 65 per cent of the city’s neighbourhoods where the median price of a single-family home was below $500,000 were in overbidding territory through the first five months of the year.

Southwest’s Cedarbrae was leading in this, with selling prices about nine per cent above asking. The neighbourhood with the lowest single-family home median price ($295,000), Woodlands in the southwest, saw overbidding by five per cent.

The city’s higher-priced neighbourhoods and properties are also being overbid, as nearly half of Calgary’s neighbourhoods were in overbidding territory from January to April.

Review CREB’s full reports for the city and region.