Market Insight for January 10

Is the Greater Toronto Area real estate market entering a promising phase with lower borrowing costs and renewed investor interest driving activity?

Surprisingly, the market showed signs of life in November, with sales activity picking up even as prices remained unchanged.

What was unusual about December was that, after the surge of activity in November, it seemed like the market was rebounding—only to cool down more quickly than anticipated.

Greater Toronto home sales fell slightly last month to cap a year that saw buyers take advantage of substantial negotiating power on price.

The Toronto Regional Real Estate Board said 3,359 homes were sold in December throughout the Greater Toronto Area, down 1.8% compared with 3,419 in the same month the previous year.

However, 2024’s home sales reached 67,610—up 2.6 per cent from 65,877 in 2023—while new listings surged by 16.4 per cent to 166,121. On paper, this provided buyers with a clear advantage and more choice than they’d seen in years, hinting at a possible market correction.

The average selling price fell 1.6% compared with a year earlier to $1,067,186. There were 4,681 new listings throughout the GTA last month, up 20.2% from a year earlier.

Beneath the surface, the so-called “buyer’s market” has offered little in terms of real bargains.

Detached homes continued to fetch high prices, while condominiums—despite experiencing more significant price drops—struggled to appeal to budgetconscious first-time buyers, many of whom remained on the sidelines, waiting for further interest rate relief.

We’re starting the year with lower rates, much lower than we started with last year, so maybe that’s going to help things along.

The Bank of Canada lowered its policy rate by a half-percentage point in December, bringing it to 3.25%, while signaling a more gradual approach to future cuts in the new year. It was the fifth cut the central bank had announced since June.

Real estate watchers in the region have said the combination of high interest rates and an uptick in new condo units coming online last year led to an oversupply that will take time to balance out. The lack of first-time buyers impacted the less-expensive condo segment more so than the single-family segments.

For many, 2024 was less a buyer’s market and more a temporary pause. While deals occasionally surfaced, affordability remained out of reach, especially for first-time buyers. As we step into 2025, the question remains: will this pause bring lasting relief, or is it merely the calm before another price surge? The answer likely depends on time and further interest rate adjustments.