What’s Going on With Toronto House Prices?

The Toronto real estate market continues to be one of the most expensive housing markets in the world, with the average selling price north of $1.1 million. While North America’s fourth-largest city has seen a slight pullback compared to the same time a year ago, Toronto house prices are far above the pre-pandemic level across all residential property categories.

Indeed, affordability is still a problem for prospective homebuyers and renters, says Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.

“High borrowing costs coupled with unrealistic federal mortgage qualification standards resulted in an unaffordable home ownership market for many households in 2023,” she said in a recent report.

However, some relief could be on the horizon for Toronto house prices, Pearce added. Interest rates are expected to trend lower in the year ahead, inflationary pressures are anticipated to ease, and more supply is coming to the housing sector. At the same time, record immigration and lower mortgage rates could lead to a tighter real estate market, meaning prices will be elevated.

So, what does the Toronto real estate market look like right now? Let’s take a deeper dive into the data and see what buyers, sellers, investors, and industry experts are witnessing.

What’s Going on With Toronto House Prices?

In December, residential property sales surged nearly 12 per cent year-over-year, totalling 3,444 units, according to the latest TRREB statistics. Robust housing demand was buoyed by rocketing immigration levels last year, which also seeped into the Toronto rental market.

The average sales price ballooned slightly more than three per cent year-over-year to just below $1.1 million.

Here is a breakdown of sales activity and price growth by property categories in the city of Toronto:

Detached

• Sales: +20.8 per cent to 371 units
• Price: -0.3 per cent to $1,626,980

Semi-Detached

• Sales: +56.1 per cent to 128 units
• Price: +1.5 per cent to $1,173,171

Townhome

• Sales: +1.8 per cent to 112 units
• Price: +25.3 per cent to $1,101,416

Condo Apartment

• Sales: +0.5 per cent to 641 units
• Price: -4.1 per cent to $709,283

Housing supply was a key issue in facilitating much of the growth in Toronto’s housing prices.

New residential listings fell close to seven per cent year-over-year to 3,886 units. Active residential listings advanced more than 19 per cent to 10,370 units.

While new housing construction activity slowed in November, it was pretty strong in 2023. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts surged at an annualized pace of 17 per cent in the first 11 months of last year to 45,992 units.

Look at the GTA Housing Market in 2024

Should prospective homebuyers expect more of the same real estate conditions in the Toronto housing market over the next year?

According to the 2024 RE/MAX Toronto Housing Market Outlook Report, home prices are predicted to slide three per cent to about $1.099 million. But sales activity is expected to be solid, rising 10.4 per cent over the next year. With the way Toronto house prices are trending and the various developments transpiring in Canada’s largest city, it is projected that it will be stuck between a balanced market and a buyer’s market.

Meanwhile, when assessing the entire Greater Toronto Area (GTA), the outlook suggests that the top three neighbourhoods will be Durham Region (affordability), Markham/Richmond Hill (affordability), and the downtown core (public transit and walkability).

However, industry leaders recommend that buyers and sellers pay attention to a few other developments beyond Toronto house prices. These include the slowdown in condo apartment unit starts, smaller condo units with exceptional locations and access to popular amenities (pool, gym, patios, and others), and greater construction costs exceeding market values.

In the end, even as mortgage rates come down, demand will likely exceed inventories. “This will eventually lead to renewed growth in home prices,” says TRREB Chief Market Analyst Jason Mercer.