Housing prices in Toronto expected to see prices bottom this spring, RBC says
Canada is seeing “early signs” of a housing market upturn and Toronto could see prices bottom out this spring, a recent report from the Royal Bank of Canada says.
In the report, which was released last week, RBC said January was the second consecutive month where residential transactions increased in major markets across the country.
“… it suggests the downturn that started in the spring of 2022 may have run its course,” the report, authored by economist Robert Hogue, read.
“Interest rate drops for fixed-rate mortgages since November have cracked the door open for buyers. And growing expectations the Bank of Canada’s next move will be a rate cut are tentatively bolstering (low) confidence.”
Hogue went on to note that a more “vigorous” and “sustained” recovery isn’t expected to happen before interest rates fall further, likely in the second half of 2024.
Canada has also not yet seen any early indicators of a “spike” in sellers due to higher borrowing costs, the report states.
“If anything, new listings were on the weak side, working to tighten demand-supply conditions. There’s a risk mortgage renewal payment shocks could set off a wave of distressed sales,” the report read.
While prices have fallen in the majority of Canada’s major markets, Calgary has bucked that trend with prices maintaining an “upward trajectory.”
RBC is predicting prices to fall one percent nationwide in 2024, with a 2.2 per cent uptick in Alberta and a two per cent drop in Ontario.
According to Hogue, the housing market may be turning a corner in the Toronto area.
“It could be that the recent drop in fixed mortgage rates was just what some buyers were waiting for to seal a deal. Or that unusually mild weather put them in a spring-like upbeat mood.”
The report was quick to point out that “stretched affordability conditions” are likely to keep buyers out of the market until interest rates, property values, or both, fall “more meaningfully.”
“For now, prices continue to drift lower,” the report continued.
The average selling price of a Toronto home across all property types peaked at $1,334,062 in February 2022 before dropping to a low of $1,037,542 later that year, according to data from the Toronto Regional Real Estate Board (TRREB).
Since then prices have largely held steady with the exception of a burst of activity last spring.
Toronto has seen six consecutive monthly price declines since July, for a total drop of $84,000, or 7.2 per cent, the report noted.
“That trend may not persist much longer if the recent tightening in demand-supply conditions is sustained,” the report read. “We expect prices will reach their bottom this spring and gradually recover over the second half of 2024.”
This article was reporteds by CP24
