Population Growth Has Likely Peaked in Canada
Overview of important developments in the Toronto Metro housing market and macro reported in June 2024
Highlights
The Toronto Metro resale market slowed down further from an already weak level.
The rental market softened, and the annual decline in rents deepened.
Population growth has set a new record but has likely peaked.
Reducing the number of non-permanent residents in Canada will be a challenging process.
Upcoming interest rate cuts will likely have a limited impact.
Renters are buckling under financial pressure.
New construction sales remain very low, while completions have reached new record highs.
Real Estate Market
The Toronto Metro real estate market continued to weaken in June, experiencing a decline in sales, an increase in new listings, and a rise in active inventory compared to the 10-year average.
One of the main stories right now is the buildup of active inventory, which has reached its highest level since 2010.
While the current level is not very alarming yet, this trend deserves attention. Market balance indicators support this view by posting the weakest readings since at least 2006, declining further compared to 10-year averages.
As largely expected (link), all price metrics declined in June and this trend should continue in the near term.
The elevated share of luxury sales, highlighted in the previous newsletter (link) continues to boost prices. At the same time, the condo sector remains weaker than the overall market and it starting to draw a lot of attention. Interestingly, this story takes roots back to the onset of the pandemic, later becoming a trend on its own which I highlighted back in 2022 (link). The chart below demonstrates this.
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