Toronto-area home price forecast reduced due to ‘soft ‘ fall market

One of the GTA’s leading real estate companies has lowered its year-end forecast for Toronto-area home prices to reflect the “soft” fall market.

 

Royal LePage said it now expects the aggregate price of a home in the GTA will increase 6 per cent in the fourth quarter of 2024, compared to the same quarter last year.

 

“The previous forecast has been revised downward to reflect current market conditions,” the report said. In July, Royal LePage had said it expected the price to rise by 10 per cent.

 

The GTA is slightly ahead of the national price forecast of a 5.5 per cent increase, which was also lowered from 9 per cent.

 

The aggregate price of a home in the GTA increased 0.7 per cent year over year to $1.15 million in the third quarter of 2024. On a quarterly basis, however, the price decreased 2.9 per cent.

“Activity in the third quarter was muted overall. The slower-than-expected spring market gave way to a soft start to fall in Toronto and the GTA, although the tide began to turn in mid-September,” Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd., said in the report.

 

“While inventory levels continued to rise and the average days on market sat higher than usual, prices came down only slightly in parts of the region in the third quarter.”

 

While sellers have come off the sidelines faster than buyers, they’re not desperate to sell, she added.

 

In Toronto, the aggregate price of a home decreased 2.3 per cent year over year to $1.12 million in the third quarter of 2024.

 

Broken out by housing type, the median price of a single-family detached home increased 1.6 per cent year over year to $1,421,000 in the third quarter of 2024, while the median price of a condominium dipped 0.4 per cent to $722,200 during the same period.

 

Condo prices saw a bigger price decrease compared to single-family homes in the third quarter, as the condo space has seen an influx of inventory with few buyers. In part, the units are too small for end-users, and investors have deserted the sector, unlikely to jump back in the buyer pool until interest rates drop considerably.

 

“Trends in Toronto’s condo market have been marching to a different beat, compared to other property segments of late,” said Yolevski.

 

A wave of new units has hit the market amid a near-record number of completions this year. And, with some investors offloading rental units that have become too expensive to carry, prices have softened.”

 

There could be an opportunity for first-time homebuyers to jump into the market as condo prices continue to soften and interest rates fall.

And the new 30-year amortization legislation set to come into effect will “ease the burden of monthly carrying costs,” she added.

 

Starting in December, any first-time buyers and purchasers of newly built homes will be able to stretch an insured mortgage an extra five years to a 30-year amortization. And buyers will be able to pay less than 20 per cent for a down payment for homes listed under $1.5 million, up from a previous threshold of $1 million.

 

“Looking ahead, as we move further into the fall market and lending rates continue to ease, sales activity and prices will start to edge upward modestly, and housing inventory will get consumed,” Yolevski said.

 

“I believe Toronto, along with most of the country, is set to see a brisk spring housing market in 2025.”

 

 

 

 

This article was first reported by The Star