Toronto Housing Market Sees Rise in Listings, Sparking Buyer Hope and Price Uncertainty
A noticeable shift is taking place in the Greater Toronto Area (GTA) housing market. After a period of low inventory and fierce competition, reports are indicating a surge in active listings. This influx of properties on the market has industry observers questioning the motivations behind the trend and its potential impact on prices.
There are several possible explanations for the increase in sellers. For some, rising mortgage rates may be putting a financial strain on their ability to hold onto properties.
The significant presence of investors in the market also raises questions. Census data reveals that investors own nearly 40% of Toronto's condo stock, with that figure jumping to 59% for units built in the past five years. A 2023 report by Urbanation, Teranet, and CIBC further complicates the picture, suggesting that nearly half of all newly completed condo investments in the GTA were operating at a cash flow loss. These factors may be leading some investors to cash out on their holdings.
While population growth remains strong and employment is stable, recent sales figures for both resale and pre-sale properties haven't kept pace. This creates a scenario where a potential glut of supply could meet with tepid demand. Although the market technically remains in favour of sellers, the scales seem to be tipping in favour of buyers with more options available.
The exact nature and extent of this trend's impact on prices remain uncertain. However, one thing is clear: if more sellers continue to enter the market, a significant correction in housing prices could be on the horizon.
The GTA’s risk profile is very high at the moment. Of course, that’s not a guarantee of a price correction, but it certainly raises the chances.