May 2024 Real Estate Market Review

In May 2024, the Toronto housing market experienced a continued slowdown in home sales compared to the same period last year, with a notable decrease of 21.7%. This contrasts with a brief surge in activity seen during the previous spring. The primary factor behind this sluggishness appears to be the persistent high mortgage rates, which have left many potential buyers on the sidelines, awaiting relief.

Existing homeowners, however, have seen a silver lining with an increase in new listings, signaling a potential uptick in demand. This influx of listings has provided buyers with more options and bargaining power, resulting in some negotiation room on prices.

According to Jennifer Pearce, President of the Toronto Regional Real Estate Board (TRREB), recent polling suggests that buyers are eagerly awaiting a decline in mortgage rates. It’s anticipated that over the next 18 months, as borrowing costs decrease, more buyers, especially first-time ones, will enter the market. This influx is expected to alleviate some of the pressure in the tight rental market.

Despite the decline in sales, the number of new listings increased by 21.1% year-over-year, reaching 18,612. However, the MLS® Home Price Index Composite benchmark experienced a 3.5% decline compared to May 2023. Additionally, the average selling price decreased by 2.5%, amounting to $1,165,691, although it saw a slight increase on a seasonally adjusted monthly basis compared to April 2024.

TRREB Chief Market Analyst Jason Mercer highlighted that while interest rates remained high, buyers continued to benefit from slightly lower selling prices compared to the previous year. Selling prices have adjusted to offset the impact of high mortgage rates, improving affordability to some extent. However, as demand increases, upward pressure on prices may resurge due to heightened competition among buyers.

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