New Condo Investors Face Financial Challenges, with No Relief in Sight
Overview of important developments in the Toronto Metro housing market and macro reported in July 2024
Highlights
The Toronto Metro resale market slowed further, driving prices down.
The rental market was weak with declining rents.
Inputs into population growth remain strong.
The outlook for non-permanent resident outflows is uncertain.
Interest rate cuts are increasingly irrelevant to homebuying activity.
New condo investors face financial challenges, and the future outlook is grim.
Global real estate prices are mirroring Toronto Metro market dynamics.
Real Estate Market
The Toronto Metro real estate market continued to weaken in July, driven by low sales, an increase in new listings, and a rise in active inventory compared to the 10-year average.
Active inventory reached its highest level for this month since 2008, building up despite seasonal forces that typically cause a decline between May and December, except for a slight uptick in September. As a result, the market balance continues to weaken further compared to the 10-year average.
All price metrics declined in July, driven in part by the decreasing share of sold luxury properties. This contrasts with previous months when an elevated share of luxury sales mathematically boosted price metrics (link).
Overall, prices are down 1-6% compared to the previous year and 17-21% below 2022 peak values. They are expected to continue declining in the near term.
The rental market is weak but stable, with average rent prices declining compared to last year.
Population Growth
Population growth remains one of the key trends. After declining below last year’s level in April, the number of new non-permanent resident permits exceeded it by a small margin in May.
Keep reading with a 7-day free trial
Subscribe to Toronto Real Estate Analytics to keep reading this post and get 7 days of free access to the full post archives.