Costly debt coupled with economic uncertainty pushed many buyers in the Greater Toronto Area (GTA) out of the housing market in 2023. However, this slowdown in home sales may not last into 2024. If the Bank of Canada cuts interest rates as expected this year. That’s what industry analysts say.
Toronto Regional Real Estate Board (TRREB) chief market analyst Jason Mercer told CP24 that if people bought into the idea that interest rates would come down, the market would see a marked improvement. Interest rate cut news also has an impact on the market. So once the real bearable interest rate cuts are seen, the flow of people who initially put off buying homes will start to come back into the market.
Greater Toronto Area home sales fell 6 percent in November 2023 compared to November 2022, according to TRREB data. In October 2023 there was a decrease of 8.7 percent compared to the same month of 2022.
Home sales were near a 20-year low through most of 2023 after rising in the spring. The median home price in Toronto was $1,082,179 in November, about the same as last year. Home prices in Toronto peaked at $1,334,620 in February 2022 across all home types. This was before the Bank of Canada’s first round of interest rate hikes.
The Bank of Canada kept policy interest rates unchanged at 5 per cent for the third time in a row in December. The central bank earlier hiked interest rates by 10 points as part of its fight against inflation. Forecasters say the Bank of Canada will start cutting interest rates in 2024. But there are different opinions about when exactly that will happen.
TRREB President Paul Barron said in a news release last month that inflation and expensive debt are reducing affordability. The impact is most visible in the interest rate sensitive housing market. However, there are signs of relief ahead.
According to a recent report by Re/Max, home sales in the GTA will increase by more than 10 percent in 2024. Because interest rates have started to come down and buyers are also moving towards the market.
According to market research firm Royal LaPage, house prices in the GTA are expected to rise by 6 percent in 2024. However, house prices will remain relatively unchanged in the first half of the year. Prices will continue to rise in the latter half of 2024. Interest rates are expected to decrease at that time.