June 6, 2024 | Buying
The housing market saw continued low activity in May, especially compared to the brief surge in market activity seen last spring. Home buyers are eagerly waiting for relief in mortgage rates, and existing homeowners are hopeful for increased demand, indicated by a rise in new listings compared to the previous year. This has provided buyers with more room for negotiation on prices.
Recent polling from Ipsos shows that home buyers are hoping for a clear decrease in mortgage rates. As borrowing costs are expected to decrease over the next 18 months, a rise in market activity is anticipated, including the entry of many first-time buyers. This could potentially ease the tight rental market situation.
In May 2024, Greater Toronto Area REALTORS® reported 7,013 home sales, which represents a 21.7% decline compared to May 2023. The number of new listings on the MLS® System increased by 21.1% year-over-year to 18,612.
The MLS® Home Price Index Composite benchmark decreased by 3.5% year-over-year in May 2024, and the average selling price also saw a decrease of 2.5% compared to May 2023. However, on a seasonally adjusted monthly basis, the average selling price saw a slight increase compared to April 2024.
Although interest rates remained high in May, buyers continued to benefit from slightly lower selling prices compared to the previous year. Selling prices have been adjusted to mitigate the impact of higher mortgage rates. Affordability is expected to further improve as borrowing costs trend lower. However, with the expected increase in demand, we may see renewed upward pressure on home prices as competition between buyers intensifies.
To ensure long-term livability and affordability in our region, a coordinated effort from all levels of government is necessary to address the current housing deficit and accommodate the needs of the growing population. Additionally, it’s essential for governments to prioritize the delivery of infrastructure to support our expanding population, including the timely completion of public transit projects such as the Eglinton Crosstown LRT, with improved transparency and clear timelines.