August Toronto Real Estate Market Update
I know what you're all asking, so I’ll get right to it. No, the rate drop in August did not make much of a difference. In fact, August was a pretty rough month in general for real estate in Toronto. Like, really rough.
Gee, I can't wait to break down this month for you...
Oh, August, you were supposed to be different! But, alas, you're a disappointment (cue High School flashbacks)... Sales were down across the board, the average price continued to fall (except for Detached homes, yes, you read that right! Check out the stats below), and it took longer for homes to sell eventually.
Now, of course, I could go back to the well and say, “Hey, it’s August, the slowest time historically in real estate. Between this and the last couple of weeks of December, it’s dead.” And I wouldn’t be lying; August is always the slowest, but I'll admit something does feel a little different this time around.
And I don’t think I’m the only one. Talk to someone selling a condo apartment or a freehold townhome and they will just, shake their head and let out a dejected sigh.
As we know, we are stuck in a rut, but how deep is the rut really? And, when will we get out? And, will the government step in and do something?
Two of the three are pure speculation. We really don’t know when (or if) things will pick up again, or if this is the new norm and the market is correcting itself, but one thing we know is that the government is trying to do something. That's something, right? .... right?
Another interest rate drop of .25 basis points occurred on Sept.4th, and on September 16th, Finance Minister Chrystia Freeland announced some updates to mortgage rules aimed at making housing more affordable. But, according to some experts, these changes might not bring long-term relief and could even drive prices higher. Sigh, you really cannot make anyone happy these days. Anyways...
Starting December 15th, the cap on insured mortgages will go up from $1 million to $1.5 million.
What does that mean? Simply put - Buyers can purchase more expensive home types with smaller down payments. More people will be able to buy a home with a down payment of less than 20%, which could open doors for some buyers. But what kind of buyers exactly?
Previously, you needed mortgage insurance if you were putting down less than 20%, but that was only available for homes priced at $1 million or less. Now, with the new $1.5 million cap, more homes will qualify for that option.
Didn't I mention Detached homes increasing in price in August? And what type of homes typically fall into the $1.5 million plus price bracket? Hmmmm, did they really need a boost? That's another conversation but with this news, I'm going out and predicting the detached market will have a big start to 2025.
But what about people who are trying to get into the housing market for the first time? Right now it is not financially possible for many people and something has to change. Well, Freeland also shared that buyers can now take out a 30-year loan if they're first-time buyers or purchasing a newly built home. Before this, the longer loan period was only available to first-time buyers of new builds.
According to Freeland, these changes are supposed to “incentivize more new housing construction and tackle the housing shortage.”
It's true that monthly-payments spread out over a more years will lower what you pay every month but from a long-term perspective, however, you could end up paying more on your mortgage because of the interest that comes with a longer amortization period.
The chart below breaks down a small example of a $150,000 purchase spread out over 25 & 30 Years. The short term gains vs the long term. Is it worth the trade off?
Will it work? That’s up for debate! It’s too soon to say, but it’s another good step forward, and we still have two more interest rate announcements to go before the new year. Will the government continue the steady drip of .25 basis points, or will they get more aggressive with maybe a .50 drop?
Time will tell, but for now, it’s a patient and safe approach to finding that “balance”.
You've read my personal opinion, but now here are the cold, hard facts.
Take a look at the August Statistics with the charts and breakdown below ⤵️
Please note that these statistics cover only the City of Toronto. Not Richmond Hill, Not Mississauga, Not Vaughan, etc. If you would like to know what's happening in another area in GTA, please reach out and let me know. I'm happy to chat!
August was a very slow month for new listings, in fact, across all property types there was a large decrease compared to July,
Specifically,
Detached homes went from 1462 new listings to 946, a -35.29% decrease.
Semi-Detached went from 346 to 246, a -28.9% decrease.
Freehold Townhomes went from 181 to 105, a -41.99% decrease.
Condo Townhomes went from 369 - 297, a -19.51% decrease.
Condo Apartments went from 3684 - 2564, a -30.4% decrease.
With a lack of new inventory coming out, the number of active listings dipped for all property types,
The rest were as follows,
Detached homes went from 2044 listings to 2044, a -11.64% decrease.
Semi-Detached went from 392 to 353, a -9.95% decrease.
Freehold Townhomes went from 228 to 192, a -15.79% decrease.
Condo Townhomes went from 560 to 548, a -2.14% decrease.
Condo Apartments went from 6,141 to 5672, a -7.64% decrease.
Unfortunately for sellers the interest rate drop did not do enough to entice buyers to jump back into the market as sales in Toronto and all across all property types sales dropped compared to July,
Specifically,
Detached homes went from 601 sales to 484, a -19.47% decrease.
Semi-Detached went from 171 to 133, a -22.22% decrease.
Freehold Townhomes went from 70 to 59, a -15.71% decrease.
Condo Townhomes went from 169 to 134, a -17.91% decrease.
Condo Apartments went from 994 to 992, a -0.2% decrease.
Detached homes had a little bit of rebound month as the average price actually went up. Improving +2.68%, from $1,648,021 to $1,692,239. Unfortunately , the same cannot be said for the other property types, specifically Freehold Townhomes and Condo Apartments kept their titles from last month as the two biggest fallers. Needless to say, it's been a long summer for these owners.
Looking more closely,
Semi-Detached went from $1,254,280 to $1,204,678, a -3.95% decrease.
Freehold Townhomes went from $1,230,046 to $1,104,497, -10.21% decrease.
Condo Townhomes went from $835,161 to $800,446, -4.16% decrease.
Condo Apartments went from $748,330 to $681,835, a -8.89% decrease.
Here's a strange one. Freehold Townhomes for the second consecutive month had a pretty significant drop in average price but, in August it actually took less time to sell a townhome than in July. Hmmm I wonder why? Maybe, buyers were recognizing that Semi Detached are still out of reach but, townhomes (freehold not condo with their monthly fees) offered great value at literally $100k less than a Semi. Keep in mind in June, the avg. price was $1,319,736, then $1,230,046 in July and now, in August the avg. price is, get this, $1,104,497! That is a pretty crazy three months. Remember those opportunities I was talking about last month? Some buyers are seeing the deals you can get with townhomes and are not wasting any time. As they, money talks.
Looking at each property type :
Detached went from 20 to 25 days to sell (+25%).
Semi-Detached 16- 21 days (+31.25%).
Freehold Townhome 23 - 21 days (-8.77%)
Condo Townhomes 26 to 34 days (+30.77%).
Condo Apartments 29 to 35 days (+17.24%)
Ok! That's it for now. Thanks for reading and have a great day! 👋 - Tyson CR
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