In a noteworthy shift that hasn’t been witnessed in decades, Toronto’s real estate is now classified as a buyer’s market.
October brought forth another month of challenging records for Toronto’s real estate sector. Experiencing a 5.8% decline in sales compared to the same period last year, the region recorded one of its lowest October home sales figures to date. This drop in sales serves as a clear indicator that the Toronto real estate market is undergoing a period of recession.
Accompanying these record-low sales figures is a substantial increase in inventory. Monthly new listings have surged by 38% compared to October of the previous year, aligning with the long-term average.
Breaking above the long-term average, active listings have soared by 50.1% this October compared to October 2022. This surge signals a market where the supply is not being absorbed, leading sellers to leave listings in the market. If this trend continues, the market could further shift in favor of buyers throughout the winter months.
Combining the increasing supply trend with decreasing demand, both the months of inventory and the sales-to-new-listings ratio point towards a buyer’s market territory.
Despite these shifts, house prices have remained relatively stable, hovering above the long-term trendline. This suggests that the buyer’s market hasn’t necessarily resulted in buyers dictating the price discovery of Toronto real estate as the market heads into the slower winter months.
The future trajectory remains uncertain, and only time will reveal whether the market will return to the long-term trendline. However, it wouldn’t be unreasonable to anticipate a sideways trading market in the foreseeable future, aiming to catch up with that trendline in several years. Drawing parallels to the last major housing cycle in Canadian real estate in the 1990s, a sideways market persisted for 2-3 years once the “bottom” was established.