GTA market sees declines in sales and prices but detached homes in 416 area show resilience

I’m always reluctant to draw any conclusions about housing markets based on seasonally low data. More specifically, July-August and December-January typically have suppressed sales volume, so using them to guide decision-making can lead us astray. Source: TRREB With that being said, there are a few key things to be mindful of in Toronto Regional Real Estate Board (TRREB)’s most recent Market Watch release:Home sales are down by 5.3 per cent compared to August last year. This is relatively in line with the declines we’ve seen each month in 2024. As well, homes are taking much longer to sell (40-57 per cent increase in days-on-market).As a result, inventory continues to accumulate in the absence of absorption, so active listings are up significantly (46.2 per cent). Nominal prices are down slightly (0.8 per cent), so when adjusted for current inflation, real house prices are down over 3.0 per cent since last year. The fourplex pump Source: TRREB When you unpack these data points a little further, you can get a better understanding of the market.Some things stand out here:1. Area code 416 detached home sales is the only category posting a YoY increase in number of units sold in August, up 8.3 per cent. It’s also the only category posting a YoY increase in price, up 3.2 per cent.2. Area code 416 condominiums and townhouses have both seen double-digit drops in volume.Presumably, the municipality’s upzoning of residential neighbourhoods in Toronto to four units has had some positive impact. A floor on area code 416 detached homes would be established by the last buyer in the market — an investor looking to tear down the home and rebuild a multiplex there. Their output value has now gone from one or two units to four units, as a purchaser can now build a fourplex on detached lots.In the 905 area code, detached sales appear to be resilient, but less optimistic than in 416. The 905 area code’s detached sales number saw a 3.3 per cent decrease. The cooling condominium market Condominium units are a very different story from the detached market. We’ve been hearing alarming reports of condominium volume piling up, with product exceeding 12 months of inventory at some periods.Condominium apartment sales continue to decline, currently at a rate of 11.4 per cent across the GTA compared to August of last year. This decline is reflected further in the preconstruction condominium sales market, where sales are 50 to 75 per cent below the long-term average.Declining rents and increasing interest rates have created a difficult cash flow scenario for condominium investors. As a result, many are looking to offload assets, and very few are looking to purchase these assets.Source: TRREB Pricing Prices are down across the board on TRREB. Notably, beyond condominiums, recipients of the pandemic’s urban exodus are seeing a steeper recoil from peak pricing, which seems to correlate heavily with the magnitude of price increases during the exodus.Source: TRREB Moving forward With another 25 basis point rate cut from the Bank of Canada, some pressure has been eased for financial stress on certain sellers. Fixed rates are declining, so there’s a little more light at the end of the tunnel for those facing a steep mortgage payment increase upon renewal in 2025 and 2026.The bigger question is when interest rate cuts will have a material impact on bringing purchasers back to the market. So far, the impact of 75 bps rate cuts has been relatively muted, as the weight of financial stress seems to outweigh the benefit of lower rates.  Enjoying this article?Get the latest REM articles in your inbox 3x week so you stay up to date on the latest in the Canadian real estate industry Success! Email Subscribe The post GTA market sees declines in sales and prices but detached homes in 416 area show resilience appeared first on REM.

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Toronto’s Multifamily Market in Q2 2024

A noteworthy report from Colliers has recently been released, which highlights key trends in Toronto’s multifamily real estate market that are of interest to investors and professionals in the industry. The report indicates some positive news for Toronto’s real estate, including market stability despite economic pressures. However, the report also discusses the impacts of recent changes to the capital gains inclusion rate on transaction timings during this period. The report also notes improvements in financing processes by the CMHC, which could lead to quicker deal closings, as well as forecasts for Toronto’s market in the future.Market ActivityIn Q2 2024, the Greater Toronto Area (GTA) multifamily market showed some improvement, according to the Colliers report, though it continued to face economic challenges. The quarter saw 21 transactions, just one less than in Q2 2023, with a total sales volume of $374.3 million—down 28.3% from the previous year. The number of suites traded also fell by 16.2% to 1,307 units.A key factor during this period was the change in the capital gains inclusion rate on June 25th. This change led to a rush in deal-making, with 14 of the 21 transactions happening within a week, as sellers sought to finalize deals before the higher rate took effect.The average price per suite slightly decreased to $321,280, while the capitalization rate rose to 3.94%, indicating the impact of higher borrowing costs on the market.Canada Mortgage and Housing Corporation ProcessingOn a positive note, the Canada Mortgage and Housing Corporation (CMHC) has made significant improvements in processing financing applications. These faster processing times are expected to lead to quicker deal closings, reducing the delays that had previously slowed the market, sometimes by as much as six to 12 months.The report highlights that despite a slowdown in transaction volumes, strong rental demand continues to support market stability. It also notes a slight increase in capitalization rates, reflecting the changing market dynamics. Looking ahead, the potential for interest rate cuts could stimulate more market activity, suggesting a more active period in the coming quarters. It is important to continue to monitor these developments in the evolving real estate market. For the full report and more statistics on Toronto’s multifamily real estate market, read Colliers’ Toronto Multifamily Market Report Q2 2024.

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Boosting Housing Supply: Canadian Government Lists Federal Lands for Affordable Housing Development

Canada Public Land Bank Tool Launched to Support EffortsOn August 25, 2024, the Government of Canada announced it is listing federal lands to help support Canadian housing. As part of this initiative, the government also launched the Canada Public Land Bank,  a tool designed to list federal properties suitable for housing development, on August 27th. This initiative is part of the new Public Lands for Homes Plan, aimed at alleviating the housing crisis by using federal land resources to boost housing construction.The Canada Public Land Bank, which currently features 56 federal properties across Canada, totalling 305 hectares, is intended to provide a streamlined approach for housing developers. The tool simplifies the housing development process by making information about available federal lands easily accessible to builders, housing providers, and community organizations. Five properties are immediately available for builders to submit their plans. A New Strategy to Address Housing NeedsCentral to this initiative is a shift from selling federal lands outright to offering long-term leases. This approach ensures that the land remains in public hands while promoting the development of affordable housing. The leasing model is intended to maintain long-term affordability and ensure that the land continues to serve the public interest.The Canada Lands Company (CLC) is involved in implementing this plan. As outlined in Budget 2024, the CLC’s mandate will be adapted to focus on delivering housing solutions more quickly. In collaboration with the Canada Mortgage and Housing Corporation (CMHC), the CLC has launched a call for proposals, inviting housing providers to access selected properties in cities like Toronto, Edmonton, Calgary, Ottawa, and Montréal. These properties are offered on a long-term lease basis at a reduced cost, encouraging the development of affordable housing.Interactive PlanningThe Canada Public Land Bank includes an interactive online map showing available federal properties for housing development. Users can explore property details such as location, size, and access to public transit. The tool also provides information on how to submit inquiries and proposals for developing these sites. The government is seeking feedback to guide the development of these properties and ensure that the process is transparent and inclusive.The initiative aims to involve a broad range of stakeholders, including Indigenous groups, community organizations, builders, and other housing providers, so housing solutions that are developed will meet diverse community needs.Accelerating Housing DevelopmentTo further address the housing crisis, Public Services and Procurement Canada plans to implement new service standards to speed up the process of making properties available for housing development. The government is also conducting ongoing reviews of surplus and underutilized federal properties to identify additional opportunities for housing. The Canada Public Land Bank will be regularly updated as new properties are added to the list.Funding and Future PlansIn addition to the Canada Public Land Bank, the government has introduced the Public Lands Acquisition Fund, with an allocation of $500 million from Budget 2024. This fund will be used to purchase land from other levels of government, expanding the inventory of properties available for housing development. Further details about this fund will be released later.Minister of Housing, Infrastructure, and Communities, Sean Fraser, highlighted the initiative’s practical focus, stating, “We need to build more homes in Canada, and one of the largest costs in building is land. By building on public lands, we can make it easier to build, and by leasing those same properties, we can ensure that the homes built remain affordable over the long term.”Canada’s Broader Housing PlanThe Public Lands for Homes Plan is a key component of Canada’s broader Housing Plan, which aims to create 250,000 new homes by 2031 and address the challenges of affordable housing.

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