Real Estate Market Update January 2025
Look to see what happened during this month
TORONTO, ONTARIO, January 5, 2025
The housing market in the Greater Toronto Area (GTA) underwent a year of change in 2024, with key shifts in listings, sales, and pricing patterns. Compared to 2023, annual sales saw a slight increase, while the number of new listings increased significantly. This created a well balanced market, which provided buyers with greater negotiation power, particularly in the condo apartment segment. As a result of these conditions, average sold prices in 2024 experienced a slight dip compared to the previous year.
Interest rates played a very important role in shaping the market dynamics of 2024. High mortgage costs were a constant problem for home buyers, particularly those looking to buy for the first time. These high interest rates created significant affordability barriers, contributing to a housing market that remained well below its typical activity levels. Despite these challenges, the second half of the year brought some relief in the form of several rate cuts by the Bank of Canada, including two consecutive large reductions. These announcements sparked renewed hope on affordability for potential buyers, and experts believe that if interest rates continue to go down into 2025 and home prices remain below their historical peaks, conditions in the real estate housing market could improve significantly in the coming months.
Elechia Barry-Sproule, President of the Toronto Regional Real Estate Board (TRREB), commented on the year’s performance, mentioning that while mortgage costs remained a critical concern for buyers, the latter part of the year brought more favorable conditions, especially due to the interest rate cuts. Barry-Sproule emphasized that with the possibility of further rate cuts in 2025, alongside home prices that have not yet returned to peak levels, market conditions could see an upswing over the next year.
The total number of home sales in the GTA for 2024 reached 67,610, marking an increase of 2.6 percent from 65,877 sales in 2023. This slight increase reflected a slight return to activity in the market, but sales still remained far below from previous highs. On the other hand, the number of new listings surged to 166,121, an impressive increase of 16.4 percent from 2023. This rise of new listings provided buyers with a wider selection of properties to choose from, contributing to a more balanced market where price growth was subdued and negotiation becomes a reality once again. The combination of higher listings and relatively modest sales growth meant that there was little upward pressure on prices.
The average selling price across all property types in 2024 stood at $1,117,600, reflecting a small decline of less than one percent compared to the average price of $1,126,263 in 2023. However, this overall decline masked significant variation within different segments of the market. For instance, ground-oriented housing types, such as detached homes, saw relatively tighter market conditions. This led to better price stability and a more resilient price performance in these categories. On the other hand, condominium apartments, particularly in the more affordable price ranges, experienced more notable price reductions. The demand for condo apartments was dampened in part by the absence of first-time buyers, who, due to high interest rates, remained hesitant about entering the market.
Jason Mercer, TRREB’s Chief Market Analyst, elaborated on these trends, explaining that while sales of single-family homes, including detached houses, saw an increase in 2024, condo apartment sales declined. The lack of first-time buyers, who are often a key driver in the condo market, was particularly impactful. Mercer noted that many would-be first-time buyers opted to stay on the sidelines, hoping for further rate relief in 2025. This hesitancy in the condo market contributed to a decline in sales, which had a more pronounced effect on lower-priced units. The single-family housing market, on the other hand, benefitted from relatively more stable demand.
In addition to interest rates, several other factors played a significant role in the housing market in 2024. Consumer sentiment, the monetary policy environment, and government development policies all had their respective impacts on the market. Issues such as traffic congestion and the overall affordability of living in the GTA also shaped consumer decision-making. The TRREB indicated that these concerns, as well as housing policies, would need to be reassessed in 2025 to ensure the market’s continued health and stability. To this end, the TRREB announced that it would provide an in-depth analysis of these issues in its upcoming Market Outlook and Year in Review report, slated for release in early February 2025.
Looking at the final month of the year, GTA home sales in December 2024 amounted to 3,359, marking a slight decrease compared to the same month in 2023. While the sales volume dropped slightly, the number of new listings continued to increase, signaling a market that remained well-supplied. The MLS® Home Price Index Composite Benchmark in December was up by less than one percent compared to the previous year, indicating minimal price movement. Meanwhile, the average home price for the month stood at $1,067,186, which was slightly lower than the December 2023 figure.
The year 2024 highlighted the ongoing challenges facing the GTA housing market, from high interest rates to affordability concerns. Nevertheless, despite these obstacles, there were signs of improvement as the market adjusted to the economic conditions. Looking ahead to 2025, experts are cautiously optimistic that with further interest rate cuts and stable home prices, the market could regain momentum and return to healthier levels of activity. However, much will depend on the actions of policymakers, both at the federal and local levels, in addressing the underlying issues affecting housing demand and supply.