Home sales across the Greater Toronto Area (GTA) experienced a significant upswing in October. Seasonally adjusted data shows that sales surged by 14% compared to the previous month, and an impressive 44% year-over-year increase, according to the Toronto Regional Real Estate Board (TTREB).
Ben Rabidoux notes in an Edge Realty Analytics report that this marks the third consecutive month of rising sales, indicating a clear rebound in buyer activity. Additionally, there were upward revisions to the sales figures of the prior four months, further emphasizing the strength of this recovery. The rise in demand is particularly notable in the condo segment, where activity has visibly picked up.
New Listings Moderate Despite Long-Term Supply Trends
On the supply side, seasonally adjusted new listings in October saw a 6.8% decline from the previous month. However, compared to the same period last year, new listings were up by a modest 6.5%. This suggests that while there has been some pullback in new listings recently, there is still a potential for a stronger flow of inventory in the coming months. Rabidoux predicts that, given the two-decade lows in supply observed throughout 2023 and early 2024, it is likely that sellers may return to the market through next spring, contributing to a continued temporary overshoot in listings above long-term trends.
Improved Market Balance as Sales Outpace New Listings
October also saw a significant improvement in the market balance, driven by the surge in sales alongside a decline in new listings. The sales-to-new listings ratio improved significantly to above the critical 40% mark, rising from 31% in October 2023 to 43% in October 2024. Historically, a ratio below 40% has been a precursor to major price declines if sustained, so this is a positive sign for market stability, according to the Edge Realty Analytics report.
Additionally, the months of inventory—a key indicator of market tightness—saw a substantial decrease. Both the single-family and condo markets showed tighter conditions compared to the previous year, indicating a shift toward a more balanced market.
Home Prices Show Signs of Stability
Home prices in the GTA appear to be stabilizing. Following a 0.5% decline in September, the MLS Home Price Index (HPI) rose slightly by a seasonally adjusted 0.1% in October. The HPI has remained largely flat throughout 2024, hovering at levels last seen in Q3 2021.
Condo Market
Elevated supply levels in the condo segment are expected to persist, with projections indicating an oversupply that could extend out to 2027. This trend may impact pricing dynamics and rental markets in the coming years, according to Rabidoux.
While the current condo market may appear oversupplied, there are concerns about a potential shortage in the longer term. Condo sales dropped 81% year-over-year in September to hit the lowest September levels on record. The cumulative sales so far this year are less than half of what was seen during the financial downturn in 2009.
This decline in new condo sales is expected to result in a related drop in condo starts throughout 2025. While there are currently around 70,000 units still in the construction pipeline, looking ahead, condo completions are projected to fall dramatically by 2028. At that point, completions may dip below 5,000 units annually, well below even the most conservative demand forecasts.
This could point to a potential condo shortage several years down the line, which could drive up prices and rents. However, timing an entry point into the market would be challenging, given the current uncertain conditions.
Condo Rental Market
The latest data from the Toronto Regional Real Estate Board (TRREB) highlights a disconnect between supply and demand for condo rentals.
Leasing activity was up 29% year-over-year in Q3, reflecting strong demand. However, this was overshadowed by a surge in new rental listings, which increased by 46% over the same period.
This influx of new rental supply pushed the lease-to-list ratio to its second-lowest point in a decade, surpassed only by 2020 levels. As a result, rents have softened compared to last year. The increase in supply is partly due to a high number of new condo completions, many of which are entering the rental market, contributing to downward pressure on rents.
However, according to the Edge Realty Report, there are some positive signs of improving cash flow for prospective condo investors. Factoring in principal repayment, the cash flow index is nearing breakeven levels.