Toronto Real Estate

VICTORALVAREZHOMES

MARKET REPORT DECEMBER 2023


                                                  




UNDERSTANDING WHAT HAPPENED IN 2023

2023 was actually two markets in one. First when mortgage rates stabilized in January, buyers jumped back into the market and prices rose by about 2-3%. In June the Bank of Canada started increasing rates again. Uncertainty about rates and not just the level of rates caused buyers to move to the sidelines. The result was drastically lower sales and prices declined again in the second half of the year.

WHAT TO LOOK FOR IN 2024

  Again, this will be year of two markets. The first half will be slow, with prices dropping by a further 2-3% on average. When mortgage rates start to fall, not all buyers will re-enter the market, as some will wait for rates to fall further.

  Five Year fixed-rate mortgages are currently at 5.6%. Expect these rates to end 2024 at 4.5%. Variable rate mortgages are currently at 7%, bu should also drop to 4.25%.

  Unemployment is now at 5.8% (it was 4.5% in 2022). We are heading into a recession. Just look at our Yield curve from year-end to 2022 to the current one.

  Continued population growth of one million people a year (500,000 immigrants and the rest refugees and international students) will increase the demand for housing. 50% of these people are coming to Ontario.

  Housing completions are averaging 220,000 per year and Ontario makes up only 35% of this total.

  Don’t expect a surplus of listings from sellers to solve the housing shortage. The Mortgage arears (over 3 months) number in Ontario is higher (.10%) than the last two years, but it represents only 2200 houses in total.

  Don’t hold your breath for ‘affordable housing’ to have any impact in 2024. Government over promises and under delivers (think Eglinton LRT Crosstown). The only way to get ‘affordable housing’ is for governments to buy housing at market prices/costs. Then sell or rent them out at 50% below market and pay for it through government deficits.


SALES FORECAST FOR 2024

Historically sales are a lead indicator for price increases. Over the last 9 years, we have averaged 92,200 sales. In 2023 the number was 65,000. For 2024 we are forecasting 80,000 sales. This forecast is in line with 2018 when we experienced our last minor recession and market correction. Look for sales to accelerate in the latter half of 2024.

TORONTO REAL ESTATE MARKET REPORT DECEMBER 2023


REAL ESTATE PRICES

Historically, real estate prices increase by 4% per year. Two factors are responsible for this: the cost of new housing which is always higher than resale due to inflation; and Immigration which increases the demand for housing.

From 2019 to 2021 we have seen price increases of 30-40%. This was followed by a decrease of 15-20% in 2022. In 2023 average prices declined by another 4-6%. The net effect is an average annual increase of 3%. We are forecasting that price increases will continue to fall in the first half of the year. The indicator is the sales-to-new listings ratio which is currently in a ‘buyers market’. They will rebound in the second half of the year and prices will be 2% higher than currently.
TORONTO REAL ESTATE MARKET REPORT DECEMBER 2023



TORONTO REAL ESTATE MARKET REPORT DECEMBER 2023

TORONTO REAL ESTATE MARKET REPORT DECEMBER 2023



Work with us

Victor Alvarez, Sales Representative

RE/MAX Condos Plus Corp. Brokerage

45 Harbour Square  Toronto,  ON  M5J 2G4 

Mobile: 647-223-0562

Phone: 416-203-6636

Fax: 416-203-1908

info@victoralvarezhomes.com

Get In Touch

Victor Alvarez, Sales Representative

Mobile: 647-223-0562

Phone: 416-203-6636

Fax: 416-203-1908

EMAIL

Office Info

RE/MAX Condos Plus Corp. Brokerage

45 Harbour Square  Toronto,  ON  M5J 2G4 

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