Toronto Real Estate Market Update: Key Insights from TRREB’s September Report
The Toronto Regional Real Estate Board (TRREB) has just released its housing market data for September, and the numbers tell a story of increasing buyer activity amid shifting market conditions. With 4,996 transactions reported through the MLS system, home sales are up 8.5% compared to the same time last year. This uptick in sales suggests that buyers are beginning to take advantage of a more favorable lending environment and slightly lower home prices.
However, while sales have improved, the pace of new listings is outstripping demand, leading to a well-supplied housing market as we head into October. This dynamic—an increase in listings and inventory coupled with rising sales—has created a more balanced environment, but also one that’s continuing to put downward pressure on prices.
Sales Activity and Buyer Trends
September saw a noticeable increase in transactions year-over-year. With nearly 5,000 homes changing hands, it’s clear that buyer confidence is on the rise. Many buyers are capitalizing on the recent shift in the lending landscape, with mortgage rates becoming more favorable as the Bank of Canada makes adjustments to its key lending rate. Lower borrowing costs, combined with the cooling effect on home prices, have made the market more accessible to a wider range of buyers, particularly those who had previously been priced out
Despite this increase in buyer activity, the rate of new listings continues to grow at a faster pace than sales. In September, 18,089 new listings were added to the market, representing a 10.5% increase compared to last year. This surge in new listings has resulted in a 35.5% year-over-year rise in active listings, which now total 25,612 properties. With more homes on the market, inventory levels have increased to 5.1 months, providing buyers with more choice and reducing the sense of urgency that was a hallmark of the market during the more competitive periods of the pandemic.
Impact on Home Prices
Rising inventory typically places downward pressure on home prices, and that trend continued in September. The average selling price for all home types was $1,107,291, which represents a modest 1.0% decrease from last year. While the average selling price gives a general sense of the market, the MLS Home Price Index (HPI) Composite Benchmark offers a more precise view, as it adjusts for the type and size of properties being sold. According to the HPI, prices declined by 4.6% year-over-year across the Greater Toronto Area, with a slightly smaller drop of 4.1% within the City of Toronto.
This overall price softening reflects the increased competition among sellers as more listings flood the market. Buyers, now with more options, are less inclined to engage in bidding wars, and sellers are adjusting their price expectations accordingly.
Market Breakdown by Home Type
Different property types are experiencing varying levels of price fluctuation, with detached homes seeing the most activity. Detached homes made up 47.1% of all sales in September, with an average sale price of $1,423,056. This marks a 1.1% decline from last year but a slight 0.6% increase from August, indicating that prices in this segment may be stabilizing.
Semi-detached homes, while accounting for a smaller share of the market, saw an average price of $1,090,749, down 0.4% year-over-year but up 6.3% compared to August. This month-over-month increase suggests that semi-detached homes remain an attractive option for buyers looking for more space than a condo can offer but at a more affordable price than a detached home.
Townhomes sold for an average of $904,200 in September, a 4.0% decrease from last year but a 1.4% increase month-over-month. Townhomes continue to be a popular choice for families and first-time buyers seeking a balance between affordability and living space.
Condo apartments represented 26.3% of total sales in September, with an average price of $682,543. The condo market saw a 3.6% decline in prices year-over-year, but like other property types, there was a modest 1.2% month-over-month increase. The gradual rise in condo prices reflects a growing interest in urban living, particularly as remote work arrangements evolve and more people consider moving back into the city core.
Days on Market and Sale-to-List Price Ratio
Another key metric that gives insight into the market's health is how long homes are staying on the market and the percentage of the listing price that homes are selling for. In September, homes took an average of 27 days to sell, which is relatively consistent with market norms. The sale-to-list price ratio was 99%, indicating that homes are still selling close to their asking prices, though the days of consistent over-asking sales may be behind us, at least for now.
It’s also worth noting that 69.9% of all transactions in September fell between $600,000 and $1.5 million, showing that the mid-market remains the most active segment. High-end homes, particularly those priced over $2 million, accounted for 6.3% of the total market, up slightly from 6.0% in August. The luxury market is holding steady, though it represents a smaller share of the overall sales activity.
Policy Shifts and Market Outlook
As we move into October, buyers are benefiting from a more favorable market balance, but several policy shifts introduced in September could further shape the real estate landscape in the coming months. These policy changes are intended to make homeownership more accessible and improve market stability.
One of the key announcements was the reduction in the Bank of Canada’s key lending rate, which is expected to keep mortgage rates more affordable. Additionally, the government introduced measures allowing mortgage holders to shop for the best rate without being subject to a new stress test, providing buyers with greater flexibility in securing financing.
Another significant change is the ability to insure mortgages for homes priced over $1 million, which could open up new opportunities for buyers in higher price ranges who previously found it challenging to secure financing. First-time buyers and purchasers of new builds are also seeing longer amortization periods, giving them more time to pay off their loans and potentially easing the financial burden of homeownership.
These policy shifts, combined with the current market conditions, suggest that buyers may have a window of opportunity to purchase in a more balanced market before any future rate hikes or supply constraints emerge.
What This Means for Buyers and Sellers
For buyers, the current market presents a rare combination of increased inventory, favorable interest rates, and slightly lower prices. This is especially true for those looking to purchase in the mid-market range between $600,000 and $1.5 million, where the majority of transactions are occurring. With more listings to choose from, buyers can take their time, compare properties, and potentially negotiate better deals than they could during the height of the pandemic frenzy.
For sellers, it’s important to be mindful of the increased competition and price sensitivity in the market. Homes are still selling, and in many cases close to asking, but pricing your property correctly from the start is key to securing a quick sale. Overpriced homes may linger on the market longer, and buyers are less likely to engage in bidding wars with so many options available. Working with a knowledgeable real estate agent who understands the nuances of current market conditions will be crucial for sellers looking to maximize their return.
Conclusion
As we enter the fall season, the Toronto real estate market is showing signs of stabilization. Sales are up, inventory levels have increased, and prices are softening slightly, creating a more balanced environment for both buyers and sellers. However, with new policy measures in place and economic factors like interest rates continuing to evolve, the market remains dynamic.
For anyone considering buying or selling a home, staying informed and working with a trusted real estate professional is essential to navigating this shifting landscape. Whether you’re looking for your first home, upgrading to a larger property, or downsizing, the opportunities in the current market are significant. Now is the time to plan carefully and make informed decisions based on the latest market data and trends.
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