Report finds Toronto home prices to overtake Vancouver’s later in the year
A top real estate service has hiked its home price forecast for Toronto, saying limited supply and tough competition will lead prices to outpace other Canadian cities and overtake Vancouver by the end of the year.
Royal LePage Real Estate Services Ltd. is now projecting a 10 per cent increase in home prices in Toronto in 2024, up from the 6 per cent it projected at the end of last year, based on strong demand from buyers in the first quarter of this year, according to its new analysis. Nationally, the forecast has risen to 9 per cent up from 5 per cent.
The forecasted aggregate home price for Toronto in the final quarter of 2024 is $1,235,630 — a more than $100,000 rise over last year’s actual final-quarter price of $1,123,300.
It’s the scarcity of housing stock, combined with an anticipation of interest rates coming down in the next few months, that’s driving this surge, according to Karen Yolevski, chief operating officer of Royal LePage.
“We knew that consumers were not going to wait for interest rates to go down in order to come back to the market,” said Yolevski. “The speed at which they came back is a bit faster than we had anticipated, which is creating some upward pressure on pricing.”
Yolevski says a major factor is that the supply of homes in major cities, particularly Toronto, hasn’t kept up in recent years with rising demand, particularly from the increased number of people immigrating to Canada. This is a significant reason why she says Toronto home prices are on track to overtake Vancouver, with a strong demand for homes from people looking to live and work in the GTA.
Toronto has already pulled ahead of New York City, with its notoriously expensive housing market, in a study by brokerage Zoocasa published this week.
Although the Toronto Regional Real Estate Board reported fewer homes sold this March than the year prior, Yolevski says that strong sales in January and February indicate a return of motivated buyers.
“March was a bit of an anomaly,” she said, noting that an early Easter holiday made for fewer business days that month.
Looking forward to the rest of the year, Yolevski expects to see a strong spring market give way to “quite a busy fall,” if interest rates begin to go down in the summer.
The Bank of Canada has continued to hold interest rates steady at five per cent, but suggested this week that rate cuts could begin to take effect in June.
The rising cost of homes has taken a toll on buyers, some of whom may be no longer willing — or able — to shoulder the expense. “That has driven a number of people to look elsewhere,” said Yolevski, noting some homebuyers are purchasing more price-friendly homes further afield in the GTA and Ontario, and even in cities in other provinces including Calgary and Montreal.
And with challenges in supply, Yolevski doesn’t see that demand easing anytime soon.
“It’s very difficult for us to create enough housing and enough in the price point that will meet the demand,” she said, noting that a lack of rental housing is also increasing pressure on the market. “The demand is far outstripping supply and far outstripping the supply initiatives that are currently underway.”
This article was first reported by The Star
