If you’ve considered buying or selling a home in Toronto in the past few years, you’ve likely heard about the competitive nature of real estate in the city. As a result of its strong seller’s market, Toronto real estate has become known for record-high prices, low inventory and competitive buying practices. While sellers have great returns across the Greater Toronto Area, things haven’t been so easy for buyers.
Now, the city’s famously competitive housing market is beginning to balance out. While some of these emerging trends are having a big impact on both buyers and sellers, other changes may not be as drastic as you expect.
If you’re looking to enter Toronto’s evolving housing market in the near future, here’s what you should know.
Curious about investing in real estate? Learn why Toronto is a great place to invest on my blog.
Seller’s Market Recap
As a world-class city, Toronto has been growing rapidly throughout the past decade. Over the years, this growth brought a high demand for housing to the city. As demand for housing grew, available inventory dwindled. This caused home prices around the GTA to increase steadily.
Then in 2020, the Bank of Canada dropped its polity interest rate as a result of the pandemic. As mortgages became much more affordable for Canadians, thousands of new buyers flocked to the already competitive market. Almost overnight, home prices in Toronto exploded. Average sale prices consistently broke records and blind bidding wars became the status quo. Today, new trends are finally beginning to emerge.
New Trends
Two years later, Toronto’s housing landscape is finally slowing down. Although plenty of new homes are still being listed for sale, fewer buyers are entering the market compared to 2020 and 2021. As a result, Toronto is seeing a lower number of real estate transactions compared to this time last year.
In addition to fewer sales, homes are also taking a little while longer to sell. These factors have led to a noticeable boost in available housing inventory throughout the GTA.
Interest and Inflation
While there are a handful of factors at play, one of the primary reasons for fewer buyers entering today’s market is interest rates. In the spring of 2020, the Bank of Canada (BOC) lowered interest rates in an attempt to minimize any economic damages caused by COVID-19. These low rates triggered a new wave of home buyers entering the market.
Today, interest rates are back on the rise in order to combat inflation. Since March of 2022, the BOC’s policy interest rate has climbed from 0:25% to 1.5%. As this sharp increase has made lending more costly for Canadians, fewer people are able to enter the market today compared to the previous two years.
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New Advantages for Buyers
Although it may be more difficult for some buyers to secure financing for a new home, the buying process itself has become slightly easier overall. As a greater number of homes remain available on the market, buyers have more properties to choose from during their search.
These more balanced conditions will also allow buyers to be less aggressive and take their time while buying a home. Competitive tactics like bully offers will become less necessary as buyers take advantage of greater inventory.
Despite greater competition among sellers and fewer bidding wars, average home prices aren’t dropping significantly just yet. However, that could change in the coming months.
Want to learn more about the buying process? Check out these resources.
- What to Know When Making an Offer
- Bully Offers: A Buyer’s Guide
- Buying Real Estate in Up-and-Coming Neighbourhoods
What Should Sellers Know?
While some of these emerging trends do favour buyers, sellers still have plenty of opportunities to find success in the shifting market. A great real estate agent will incorporate the latest marketing and presentation tactics such as digital advertising, staging, and pricing strategies to help ensure you’re happy with your home sale.
If you’re looking to sell your home in the near future, reach out to your agent. They’ll begin with an honest valuation of your home and can help you optimize your property to ensure you get the best price upon selling.
