Toronto’s real estate market in December 2024 experienced a decline in transactions across all segments. Average prices saw only marginal changes, with detached homes witnessing the most significant price reductions compared to the previous year. The positive momentum observed in October and November, fueled by five consecutive interest rate cuts, was tempered by the uncertainty surrounding potential 25% tariffs on goods sold to the U.S., a policy under consideration by the incoming U.S. President. Such tariffs could result in Canadian job losses and a potential slowdown in the economy, prompting some buyers to retreat from the market.

Overall, the real estate landscape in 2024 mirrored that of 2023, with few notable differences: the availability of more listings provided buyers with greater options as the market grappled with higher interest rates for the majority of 2024. By the end of the year, Toronto’s market saw five months of inventory, with 6,232 active listings—41% more than at the close of 2023.

As expected, the freehold and condominium markets did not move in tandem due to the price differential. In 2024, the condo market experienced a notable surge in supply, while the number of new freehold listings decreased compared to previous years.

Low consumer confidence in the market leads to fewer freehold listings

A lack of market confidence resulted in fewer new listings, particularly in the freehold sector. New listings for freehold properties in 2024 were 10% lower than the peak in 2021, though only 4% below the five-year average for 2000-2024. Homeowners hesitant to sell, due to uncertainty about their ability to achieve a favorable sale price, contributed to this trend.

The effects of 11 interest rate increases since 2022 are also evident. Freehold sales in 2024 were 38% lower than the peak of 2021 and 20% below the five-year average from 2000-2024.

Supply increases due to high carrying costs and tax changes

2024 saw a surge in new listings as investors decided to sell spurred on by higher carrying costs, unfavourable change in tax rules for capital gains and tax deductibility and an adverse regulatory environment.  Unlike the freehold market where the 2024 new listings were lower than the 5 year average, new listings for Toronto’s 2024  condo market was an all time high and 20% higher than the 5 year average.

Fewer sales with higher mortgage payments and less investors

Despite the surge in listings, there were fewer sales as owner occupiers were facing higher monthly payments and would be investors shied away due to the backlog in cases at the Landlord and Tenant Board.

All eyes on the US

Looking ahead to 2025, much will depend on the trade policies of the incoming American administration. If no tariffs are implemented, the spring market is expected to be the strongest in recent years. Conversely, should the 25% tariffs be enacted, the spring market may experience significant weakness. Any scenario in between would likely result in a market that outperforms 2023 and 2024, though it would not return to the levels seen in 2022.

IMPORTANT: You have until April 30, 2025 to make your 2024 Vacant Home Tax Declaration.  If your Toronto property was occupied, make sure to complete this declaration.  Otherwise, you will be pay 3% of the assessed value (which is more than 4X the property tax rate).

Shen Shoots the Breeze

As we begin the new year, many of you may be embarking on the challenging task of decluttering in preparation for a potential move. We’ve already started these conversations with families who are dreaming of finding their next home. Others are using the start of the year as an opportunity to reflect and make changes to live differently.

In my line of work, I often advise clients to declutter before selling their homes. This has led me to become particularly observant about the items people keep in their living spaces. As a spender and admittedly a bit of a clothes horse, I also face the challenge of managing clutter.

To help maintain control over what enters my home and to encourage donations or discarding of unnecessary items, I’ve developed some personal guidelines. One of the most common questions that shows up in many decluttering articles is: “Do I need it, or do I just want it?” While this question may seem simple, it’s often much harder to answer. In truth, Dave reminds me, all we need is food and oxygen. So, how do we differentiate between critical wants and superfluous desires?

Here are some guiding questions I’ve found helpful when bringing new items into the house:

1. Can I borrow it? Whether from a friend or a library, borrowing may be a practical solution.
2. Can I rent it? Do we really need every garden tool or work equipment? Renting might be a more sensible option.
3. Can I purchase it used? Sometimes, the extended search for a second-hand item helps us realize we may not need it at all.
4. Do I need it right now? Is it urgent, or can it wait?
5. Am I buying it just because it’s on sale? Sales often create a false sense of value. Before making the purchase, revisit the first four questions.

When starting the decluttering process, I recommend focusing on one room at a time. If it’s been a while since you last decluttered and you’re planning to tackle your entire home, try setting a timer for 45 minutes to keep the task manageable. Designate bins for items to keep, donate, or discard.

Here are some additional questions to consider when evaluating your possessions:

1. If it breaks or needs a repair, will I replace it? If your answer is “no,” it’s likely an item you can part with.
2. Do I already own something similar?
3. Do I use it? Set a time limit, such as 1 or possibly up to 2 years – if we want to be generous. If you haven’t used the item in that time frame, it’s unlikely you will in the future. Consider donating or discarding it.
4. Has it expired?

The most difficult items to part with are often those that are sentimental or “I-could-use-it-one-day” items. Joshua Fields Millburn and Ryan Nicodemus, the creators of The Minimalists, propose the 20/20 rule: If an item can be replaced for less than $20 and within 20 minutes, it might not be as valuable as we think. This approach can help us assess whether the item truly holds sentimental value or if it’s something we can easily replace in the future.