Toronto’s real estate market showed continued signs of recovery in November, following slower sales during the first three quarters of the year. Transactions in November were 39% higher compared to November 2023, with detached properties leading the way. Prices for freehold properties increased by approximately 5%, while condominium prices experienced a slight decline.

The real estate market is shifting from a seller’s market to a more balanced market. The sales-to-new-listings ratio increased from 26% in September 2024 to 51% in November 2024, indicating this shift. Additionally, the months of inventory decreased from 5.5 months in September to approximately 4 months in November, further reflecting this change. Meanwhile, interest rates and new mortgage policies are poised to stimulate the market.

On Wednesday, the Bank of Canada lowered the overnight rate to 3.25%, marking the fifth reduction since June 2024 and the second 0.50% cut. This will provide immediate relief to variable-rate mortgage holders, while fixed-rate mortgage borrowers will need to monitor bond market developments. In either case, these lower rates will reduce payments for households across various lending products, including lines of credit. Moreover, the lower rates are expected to attract buyers who have been hesitant over the past two years, as the overnight rate rose from 0.25% in Q1 2022 to a high of 5.0% in June 2024.

In addition, new policies aimed at improving affordability will take effect this month. These presents from the government include: increasing the mortgage insurance price cap from $1 million to $1.5 million; allowing first-time homebuyers purchasing new construction to access 30-year amortizations; and exempting borrowers from the stress test when switching mortgage lenders, provided the mortgage amount and amortization period remain unchanged.

Together, these financial adjustments are expected to provide a boost to the real estate market. While these changes improve affordability, we hope that reforms to the Landlord and Tenant Board (LTB) will further enhance liquidity in the market.

A recent report from the real estate board highlighted that in 2020, there were 20,000 pending cases at the LTB. By February 2024, this number had surged to 53,000. As discussed in our October’s post, the backlog at the LTB is contributing to uncertainty and inefficiency in the rental market, which in turn affects both the rental and resale markets.

Due to the backlog, it currently takes more than 8 months to obtain a hearing. As a result, if a tenant refuses to pay rent, a landlord may face delays of up to a year before obtaining an eviction order. Similarly, when purchasing a rental property for personal use, a new owner cannot guarantee vacant possession if the tenant disputes leaving, as a hearing may not be scheduled for months. This uncertainty has led to a decline in investor confidence with many landlords receiving significantly lower offers when selling with tenants in place.

Tenants are also negatively impacted, as disputes regarding poorly maintained properties can go unresolved for almost a year.  

With landlords exiting from their investment properties, fewer rentals become available, leaving higher rental rates for tenants.

In response to these challenges, the real estate board submitted the following recommendations to clear the LTB backlog (see full report here):

1. Restoring Access to Justice: Addressing the issue of virtual-only hearings
2. Tackling the Growing Backlog: Reducing delays in case resolution
3. Improving Efficiency: Hiring and retaining more adjudicators
4. Ensuring Stability: Securing long-term LTB staff appointments
5. Addressing Internal Challenges: Training staff and adjudicators effectively
6. Timely Case Resolution: Reducing delays prior to termination dates
7. Modernizing Technology: Addressing the impact of outdated systems
8. Enhancing Screening Processes: Improving the fairness of termination applications
9. Expediting Cases: Minimizing delays from LTB member reappointments
10. Fighting Discrimination: Reviewing practices that impact both renters and landlords

We sincerely hope that many of these recommendations are implemented so that both landlords and tenants can resolve disputes more quickly, contributing to a more fluid and efficient market.

Shen and Dave Shoots the Breeze

As this year comes to a close, we want to express our deepest gratitude to our clients for entrusting us with one of the most precious and personal investments you will ever make. Thank you for literally opening every corner of your family home to us, for sharing your hopes, fears, and dreams as you navigated this life-changing journey. We are truly honored to have walked alongside you. Our heartfelt prayer is that your new homes become sanctuaries of peace, rest, and warmth. May they be places where you find comfort and joy, and where all who enter feel welcomed. We hope you bring light and love to your new neighborhoods, becoming blessings to those around you.

In the spirit of the season, we’d like to share with you a song that has become a new favourite of ours – How Many Kings by Downhere. Its message has resonated deeply with us, and we hope it touches your hearts as it has ours.

Wishing you a Christmas filled with blessings and a New Year overflowing with health, joy, and prosperity. Thank you again for allowing us to be part of your journey.