A Tale of Two Markets

Toronto’s March 2024 transactions were lower despite more listings compared to a year ago.  Condo apartment sales saw the biggest drop as investor appetites waned.  Prices for detached properties fell as interest rates kept these properties out of reach for most households, while semis saw an increase in price as they’re more affordable freehold options amongst Toronto’s growing population.  Average prices for condo apartments remained stable.

It’s a tale of two markets as the freehold market is gaining traction, while the condo apartment market stalls.  Months of inventory for freehold properties has dropped from 3 months in Q4 2023 to just over 1 month as owner occupiers re-enter the market after staying on the sidelines.  The condo market is sluggish with about 3.5 months of inventory but down from a high of 5.5 months in Q4 2023. 

One of the main reasons for slow condo sales is that investors – which make up a large cohort of buyers – face negative cash flows due to higher interest rates combined with relatively high prices.  Investors also face headwinds from a regulatory framework where:  expenses for short-term rentals (eg. Airbnb) are unable to be written off against income, the case backlog at the Landlord and Tenant board means evicting tenants for non-payment can take a year and difficulty in ensuring vacant possession when selling tenant occupied properties.

The federal budget comes out next week.  Being an election year, it will be interesting to see the government’s housing related initiatives. 

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