Toronto Real Estate Market Revival: Eight-Month Sales Highs

The Toronto real estate market underwent a remarkable shift in December, registering the most substantial increase in sales in eight months. This change in dynamics has been driven by lower prices and more attractive borrowing costs, as indicated by recent data from the Toronto Regional Real Estate Board.

A Notable Shift in the Real Estate Landscape

Residential transactions in Canada’s largest city rose 21%, surpassing 6,000 deals last month, adjusted for seasonal variations. This monthly increase, the most pronounced since April, is signaling a new positive phase in the market.

Downward Pressure on Prices Despite Increased Sales

Despite the uptick in transactions, a build-up of housing inventory has led to a fifth consecutive decrease in prices. In December, the benchmark price for a home in Toronto dropped by 1.3%, settling at C$1.09 million ($816,000). Although prices have declined, the year concluded with minimal changes from the outset.

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Favorable Conditions Boost Buyer Activity

The unexpected surge in buyer activity in December aligns with a gradual alleviation of some financial pressures. The reduction in long-term borrowing costs in the bond market and expectations of interest rate cuts by the Bank of Canada this year are creating a more favorable environment for buyers.

Unique Opportunity: Attractive Mortgage Rates

Royal Bank of Canada, the country’s largest lender, is once again offering five-year fixed-rate mortgages below 6%, further facilitating access to homeownership.

Toronto Real Estate: Affordable Prices Spur Buyer Opportunities in 2023

Home prices in Toronto are currently the most affordable since March, coinciding with the resurgence in buying activity. Jason Mercer, Chief Market Analyst for the Toronto Real Estate Board, notes that buyers active in the market throughout 2023 benefited from a wider range of choices, enabling more favorable negotiations.

Land Transfer Tax and Market Trends

The sales surge in Toronto may be linked to the new, higher land transfer tax on homes exceeding C$3 million. Buyers may have rushed to finalize deals before the elevated rate came into effect on January 1.

Toronto Real Estate: Slowest Year Since 2000 in 2023

In spite of this revival, Toronto’s real estate market faced an exceptionally sluggish year in 2023. According to real estate board data, it recorded the lowest annual number of transactions since 2000.

Decelerating Listings Ease House Price Pressures

Last month’s sustained downward pressure on house prices is also due to a prior surge in property listings. However, there are signs that the influx of potential sellers is decelerating, as evidenced by a decrease in new listings in December compared to the same period the previous year.

Toronto’s real estate market saw a significant increase in December, with a 21% increase in transactions, but prices continued to fall despite favorable buyer conditions, according to WSJ Print Delivery.