Toronto's Detached House Market: A Data-Driven Analysis — October 2024

The Toronto detached house market, once a paragon of Canadian real estate, has undergone significant changes in recent years. A closer examination of the data reveals a complex interplay of factors driving these shifts.

Detached House Price Trends

Benchmark and median prices for detached houses in Metro Toronto have experienced fluctuations over the past year. While prices initially declined, they have stabilized in recent months. This suggests a potential market recovery or a period of price consolidation.

Sales & Purchase Activity

The number of house purchases has decreased since 2021, likely due to rising interest rates and economic uncertainty. However, there are seasonal patterns, with higher activity during the spring and summer months. With activity so low in 2024, analysis will likely declare a recovery in 2025. The bar for a successful year has now been set very low.

Houses for Sale

The number of detached houses for sale has been trending upward since the lows of 2021. While it is still technically a seller’s market, the current trend indicates a more competitive market where buyers increasingly have room to negotiate and manoeuvre. This trend is consistent with the rise in mortgage rates, which may have deterred some potential buyers.

Market Dynamics

While it is still technically a seller’s market, the current trend indicates a more competitive market where buyers increasingly have room to negotiate and manoeuvre. This trend is consistent with the rise in mortgage rates, which may have deterred some potential buyers. If the current trend continues, Toronto is on the verge of a balanced market. When months of inventory surpass the 5-month threshold, it typically indicates a balanced market.

Price Forecast

Forecasts suggest a continued upward trend in detached house prices in Metro Toronto for the long term, with potential fluctuations in the medium term. However, the trajectory will depend on various factors, including economic conditions, interest rates, and immigration patterns.

Key Considerations

Borrowing Costs

The rising cost of borrowing has significantly impacted the market. While mortgage rates have recently declined from their peak, they remain higher than in previous years. This has made homeownership more challenging for many potential buyers.

Affordability

The affordability of detached houses in Toronto has become a major concern. The rising cost of housing, combined with increased mortgage rates, has made it increasingly difficult for many people to purchase a home in the city. A very small share of the population can afford the detached house market, with many potential buyers being priced out. This has led to a growing demand for alternative housing options, such as townhouses and condos.

Employment

While the Greater Toronto Area (GTA) total population has been growing dramatically, full-time employment growth has not kept pace. This disparity has made it even more challenging for many households to afford a detached house, as most require two full-time incomes to meet the financial demands.

An Uncertain Future

The Toronto detached house market is a dynamic landscape influenced by a complex interplay of factors. While the city's core remains resilient, the suburbs have experienced more pronounced fluctuations. As interest rates stabilize and economic conditions improve, the market may see a rebound. However, the long-term outlook will depend on various factors, including mortgage rates, employment, housing supply, and economic growth.