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Toronto home sales surge in February as buyers expect rate cuts

February 2024 TRREB recap

Growing confidence in future rate cuts appears to have fueled a spring housing market resurgence. The February data released today from the Toronto Regional Real Estate Board (TRREB) reveals both home sales and new listings rose strongly on a year-over-year basis; a total of 5,607 deals occurred over the course of the month, up 17.9% compared to the same time period in 2023. 

Sellers also appear to be returning to the market with renewed vigour, with 11,396 new listings brought to market, a whopping annual increase of 33.5%. 

From a short-term perspective, February market sales were slightly lower than the preceding two months, with listings flat from January, according to TRREB. However, the board points out that monthly data can be “somewhat volatile, especially when the market is approaching a transition point.” Steep mortgage rates continue to put a lid on sales, keeping them from reaching their record-breaking 2021 levels.

Borrowers have adapted to higher mortgage rates

Overall, the annual data reflects a market populated with motivated buyers, who are optimistic that lower borrowing costs are coming. Buyers are also acclimating to higher mortgage rates overall, says TRREB President Jennifer Pearce, and are now ready to make a move in the market after preparing financially.

“We have recently seen a resurgence in sales activity compared to last year. The market assumption is that the Bank of Canada has finished hiking rates,” she states.

“Consumers are now anticipating rate cuts in the near future. A growing number of homebuyers have also come to terms with elevated mortgage rates over the past two years. To minimize higher monthly payments, some buyers have likely saved up a larger down payment, chosen to purchase a less-expensive home type and/or looked to a different location in the GTA.”

Despite robust sales activity, prices have yet to budge, with the average February selling price rising 1.1% year over year to $1,108,720. The MLS Home Price Index Composite benchmark, which reflects the most typical home price with the extreme highs and lows stripped out, inched up by just 0.4%.

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However, there are a number of factors at play that set the stage for price growth in the coming months: strong migration to the area has kept a boil under housing demand, and both new and resale supply remain well under sustainable levels.

TRREB’s Chief Market Analyst Jason Mercer anticipates prices will get a boost once interest rate cuts materialize in the second half of the year.

“As we move through 2024, an increasing number of buyers will re-enter the market with adjusted housing preferences to account for higher borrowing costs. In the second half of the year, lower interest rates will further boost demand for ownership housing,” he says. “First-time buying activity will also be a contributing factor, as many renters look to trade high monthly rents for a long-term investment in which they can live and build equity.”

The Bank of Canada’s next interest rate announcement, due tomorrow, is expected to offer further hints as to when those rate cuts may occur, following promising inflation and GDP reports out this quarter.

Sales activity is strongest in 905-area markets

Sales growth was up by double digits across the Greater Toronto Area, with activity especially concentrated in the 905-area markets. Sales in the 905 rose by 20.3%, totalling 3,636 transactions. Demand was slightly softer within the City of Toronto limits, with a total of 1,971 homes trading hands, marking a year-over-year increase of 13.6%.

Prices were roughly flat on an annual basis across the region, rising just 1.6% in the 905 to an average of $1,128,338, and dipped -0.01% to $1,072,528 within the city. However, buyers in both areas are enjoying an influx of supply, with new listings up 35.2% and 30.6%, respectively.

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Penelope Graham, Director of Content

Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.