This is a Special Report we have prepared for Buyers and Sellers as we move through the Fall Real Estate Market. First-Time Buyers Take Note.
September saw a surge in new listings of 18,089, blasting past the level of 12,547 in August. This resulted in vast number of available homes for sale at month end, 25,612 properties. Some may attribute this to the Bank of Canada (BoC) rate reduction in September or it may be that Sellers wanted to get on board for the Fall Market once vacations were over. The resulting sales in September were 4,996 properties as reported by The Toronto Regional Real Estate Board (TRREB) on October 3rd. That number was essentially flat to the level achieved in August. This has left the GTA with a 3.4 month supply of homes to begin October. A very strong Buyer's Market at a macro level.
What does stand out is the number of available listings, which jumped by almost 3,000 additional properties compared to August. Average selling prices were up slightly over the August level according to TRREB at $1,107,291. Detached sales have kept the average selling price stable month to month. The average selling price for all home types reported by TRREB was down 0.8% from a year earlier. Prices have held strong on average since last year. The condo market has struggled and selling price performance varies by community.
This could prove to be the best time to make a move in the real estate market since the start of the pandemic in the spring of 2020. An abundance of homes are available for sale, most GTA communities are in a strong Buyer’s Market and mortgage rates are on the decline.
Looking back, a discounted five year fixed rate mortgage in October 2023 was about 5.79% and the best variable rate mortgage was around 6.3%. Roll forward a year and a five year fixed rate mortgage is now about 4.39% and a variable rate mortgage is around 5.55%**. These rates will decline further by the end of the year as we have another BoC rate announcement on October 23rd, where it is possible the Bank may cut rates by .25% -.50%. A final rate announcement will happen in December and by the end of the year we could see another .25% reduction. This would put the BoC key interest rate to 3.5-3.75% at the start of 2025. That would be down from 5.0% at the start of 2024.**
Getting a mortgage pre-approval now, will allow Buyers to secure the lowest rate available by the time they close on a new home. The charts below show the historical interest rates for a discounted five year fixed rate mortgage and a discounted variable rate mortgage.
Rate Charts Courtesy of Ratehub.ca
Canada Mortgage and Housing Corporation (CMHC) announced changes to their mortgage terms providing Buyers the opportunity to take out a 30 year amortization on new insured mortgages and allowing for insurance on mortgages on purchases up to $1.5 million. CMHC Mortgage Reforms
If you wish to speak with a Mortgage Broker about your own situation, then please let us know and we can put you in touch with one of our trusted Mortgage Brokers. Mortgage Brokers don’t charge you for their service, Mortgage Brokers are paid by the Lender who funds your mortgage. Mortgage Brokers are independent and objective in their advice, unlike your Bank or Credit Union, and they will get you the best rate and mortgage terms available.
There are a number of positive stories coming together, lower interest rates, more mortgage amortization options, and an increasing number of homes available for sale. This is now a great time to buy and sell. For Buyers there are lots of options and less competition for homes. For Sellers, this doesn’t mean you will be giving your home away as prices have held up pretty well over the past year. Condo apartments are the exception in the GTA but they are a great jumping in point for first-time buyers if you find the right ones.
No doubt there are some outlier sales, where homes have sold significantly below what may have been expected, but usually there is a story around those sales and why they sold for what would be considered less than market. We saw the opposite in the strong Seller’s market where some Buyers would pay well beyond what would have been considered a market price. This happens in every market, buying and selling homes is a very emotional experience and sometimes emotions override the best advice and less than ideal decisions are made in hindsight. As REALTORS® we have to research the details of selling prices and try to understand what homes sell for on average and why they sell for a certain price and then we apply adjustments "plus or minus" to properties to establish a reasonable buying or selling price, without an emotional factor.
When considering selling or buying it is important to explore the market details about your community, each home type and style and the level of competition before you can make any real assumptions on the local market home values. TRREB trends are an indication of the overall market but detailed local analysis is essential before making any real estate decisions. Homes are definitely taking longer to sell with average days on market for all home types in the GTA at 43 days. Still, homes that show well and are priced appropriately will sell more quickly.
Talk to us about home presentation and how we price homes for success.
If you are thinking about selling your home and you didn’t buy your home in the 2021-2022 frenzy then there may be a significant gain in value for your home. This chart shows average selling prices since 1994 and while there are lots of fluctuations and corrections the trend is up.
The average selling price at the end of 2019 was $837,788 and at the end of 2015 was $609,110 and 2010 was $431,463. If a Seller bought anytime pre-pandemic they are most likely able secure a significant gain on the sale of their home, assuming they didn't borrow further against their home, and still buy a new home at a better price than during the pandemic. The good news is that the long term trend in selling prices is up and 2025 may likely be that turnaround year.
If you are ready and qualified to buy a new home, then NOW is the best time. We think, the Spring Market could bring higher selling prices, especially if the number of New Listings slow down and Buyers absorb the existing inventory. There is however, one caveat to keep in mind, if the number of New Listings continues to outpace sale volumes, then it may take a little longer before average prices to rise significantly. This market is different than in 2021 and the Spring of 2022, where we experienced a very low level of available homes, a large level of Buyers and historically low mortgage rates. At that time sales outpaced the market’s ability to replace those sales with New Listings and as a result prices skyrocketed.
The number of variables that affect the real estate market are great and can be complex at times, however Right Now, a very unique opportunity exists for qualified Buyers to take advantage of a large inventory of available homes, in a declining interest rate environment where the number of sales are well below the number of New Listings entering the market daily. This is a Buyer’s Market in most communities of the GTA.
Like most things in Real Estate, this opportunity won't last for long.