In November, the market had already seen 4 consecutive interest rate cuts, with another one expected on December 11.
How did the market respond in November?
And what’s the market outlook for 2025?
Here’s what the president of the Toronto Real Estate Board said in the news release with the November statistics.
“As we approach the end of 2024, I am pleased to report an improvement in housing market conditions.
Many home buyers patiently waited on the sidelines for reduced inflation and lower borrowing costs.
With selling prices remaining well off their historic peak and monthly mortgage payments trending lower, the stage is set for an accelerating market recovery in 2025.”
Let’s see where that confidence came from based on the November statistics.
Then I’m going to show you some very interesting trends based on the data analysis from 2021 to 2024.
The market was a lot more active this November compared to November last year.
Sales activities were up a significant 40% year over year, with almost 5,900 sales recorded in November.
New listings were up 6.6%.
Did you remember the comparison of new listings in April 2024 vs April 2023?
New listings were up 47.2% in April 2024.
In November, the number came down to only 6.6%.
The supply side has slowed significantly, with far fewer people putting their properties on the market.
Of course, there are still a lot of inventories on the market that have yet to be consumed.
Active listings were still up 30.2% compared to November 2023.
This was already a huge improvement from April, when active listings were up 74.4%.
So the market is definitely digesting the inventories, but it is going to take some more time.
Based on the November numbers, we still have 3.4 months of inventories in the detached market.
Only 1.5 months of inventories in the townhouse market.
Condos are going to take the longest, there are still 5 months of inventories.
Like I said before, townhouses are going to lead the way to recovery, followed by detached houses.
We probably won’t see obvious improvements in the condo market until mid next year.
Let’s zoom in a little bit and take a look at the distribution of the sales activities across different housing types in the 416 and 905 areas.
Which market segment was the most active in November?
Townhouses in the 416 area, with sales activities up 51.1% year over year.
The next one was detached homes in the 416 area, up 49%.
Townhouses in the 905 area, up 44.8%.
Detached homes in the 905 area, up 42.2%.
Condo sales activities were actually up significantly as well compared to last year, but we might not have felt it because there were a lot of inventories.
416 condos were up 37.9%.
905 condos were up 32.9%.
Semi detached homes were up around 25%.
We are going to focus on supply and demand in this episode.
We will talk about pricing trends in different types of homes next week, so make sure you subscribe and hit the bell so you won’t miss it.
Now let’s zoom all the way out and take a look at sales activities from 2021 to 2024.
2021 was the year immediately following Covid and was the busiest year in recent Toronto real estate history.
We went over 15,000 sales in a month in the spring market.
Then things started going downhill in subsequent years.
This year we only had around 44% of the activities we had in 2021.
Here’s something interesting to note.
Every year, you see activities slowed down starting in September and into the winter months.
But this year, you see a sharp increase in activities going from September to October.
And sales were going strong even in November.
The effects of the rate cuts are kicking in and we are starting to see a clearer sign of market recovery.
Now let’s take a look at the supply side of things.
The active listing graph is pretty much the opposite of the sales activity graph.
It keeps increasing every year.
You see, this is exactly why we saw a red hot market back in 2021.
It had the highest demand and lowest supply.
On the other hand, we are seeing the lowest demand and highest supply in 2024.
I’m going to show you another set of very interesting graphs.
For the first 11 months of this year, we had 64,000 sales.
For the same period in 2021, we had almost 116,000 sales.
How many of them were detached, townhouses and condos?
Were there any significant differences in 2021 versus 2024?
Let’s start with 2021.
Detached homes made up 45.2% of the total sales.
Semi detached, 9.2%.
Townhouse, another 9.2%.
Condo townhouse, 8%.
Condo, 27.4%.
Now, let’s take a look at 2024.
The percentage distribution almost looks the same as in 2021.
It’s interesting to see that in the best market or the worst market, the demand in different housing types still remains the same in proportion.
How about we factor in the supply side of things?
Let’s talk about inventories.
We know that in 2021, the market conditions were extremely tight with high demand and low supply.
The detached market had an average of only 27 days of inventories.
And the condo market had 1.2 months of inventories.
What did 2024 look like in contrast?
At the start of the year, the detached market started with 2 months of inventory, then it climbed up to almost 5 months of inventory in September.
With the boosted sales in the past 2 months, the inventory level is now back to around 3.4 months.
What about the condo market?
Interestingly, it had the same trajectory as the detached market.
In September, inventories were high up at almost 7 months, now we’re back down to 5 months of inventories.
Let’s suppose 1 month of inventories translates to an extremely hot market like in 2021.
If the market continues to digest inventories in a similar way like the previous 2 months, then we may actually see a pretty strong spring market in 2025.
The recovery in the condo market will lag a few months because it has 2 more months of inventories compared to the detached market.
You see, according to the data, the condo market is definitely not as bad as it sounds in the media.
Most of the doom-and-gloom headlines focus on pre-construction condos closing this year, with buyers feeling the squeeze to flip them in today’s high-interest rate environment.
And I get it, sometimes you need exaggeration for attention.
I’ve always told my clients to only invest in pre-construction if the plan is to keep the property for a few years after closing.
For investors who sold their 5 years or older condos, they made good profit even in today’s low market.
So if you just closed a pre-construction condo this year, hang tight, interest rates are coming down and the market recovery will come.
Next week, we are going to look at pricing trends in depth, make sure you subscribe and hit the bell so you won’t miss it.
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