Surge in Toronto New Listings Eases Market Pressure in April
This April, Toronto experienced a significant increase in new listings. Despite this influx, many buyers remained cautious, which brought the available inventory back to pre-pandemic levels and alleviated some of the pressure on the housing market. Unlike previous months, this activity slowdown was more uniform across various regions, with Saskatchewan, New Brunswick, and Newfoundland being the only provinces to see an increase in activity. Conversely, more expensive markets in Canada continued to show signs of weakness.
Sales Activity Slows Amid Anticipation of Interest Rate Cuts
April was another subdued month for resale activity in Canada. Nationally, seasonally adjusted home resales fell by 1.7% month-over-month, reaching the lowest level of activity this year. This broader market softening diverged from the mixed activity pattern seen earlier in the year. Even Alberta, which had been relatively strong, saw a 4.5% decline in activity. While month-over-month sales can be volatile early in the spring buying season, this might also signal potential buyers stepping back after months of rising home prices. The coming months will provide more clarity on buyer interest in Alberta.
Quebec, Halifax, and Winnipeg followed similar trends, with sales declining by 1.3%, 6.2%, and 4.6% respectively. As in previous months, Toronto and its surrounding areas, including Hamilton-Burlington, as well as major B.C. markets like Victoria and the Fraser Valley, experienced the weakest activity. In contrast, Vancouver saw a 5.1% increase in sales, marking the second consecutive month of growth exceeding the national average.
More Sellers Enter the Market
April saw an increase in the number of sellers, easing some of the housing market pressure and bringing inventory back to February 2020 levels, with 4.2 months of supply. Sellers were particularly active in B.C. and Ontario, likely in response to the upcoming change in the capital gains inclusion rate. This prompted many to list their properties ahead of the June implementation date. While new listings also increased in Alberta and Saskatchewan, they remain below pre-pandemic levels, keeping supply-demand conditions tight.
Home Prices Remain Stable
Home prices remained stable in April, following a slight 0.2% decline in March according to Canada’s MLS home price index. This marks the third consecutive month of virtually unchanged price growth, indicating that the correction in Canada’s home prices may have run its course. Despite this stability, prices are still slightly lower than they were a year ago due to strong activity last spring.
Affordability issues are preventing prices from rising significantly in most markets. However, Prairie markets like Saskatoon and Calgary saw solid price growth, with increases of 1.0% and 0.4% respectively. Toronto also showed a third consecutive month of price growth, indicating a gradual recovery from the slower winter period. Despite the new listings in April, we anticipate prices will rise more gradually over the second half of the year and into 2025.
Budget-Constrained Buyers Keep Activity Subdued
While the influx of new listings has helped rebalance Canada’s housing market, budget-constrained buyers are still keeping activity subdued. Recent tax changes may prompt more investors to sell before the capital gains inclusion rate changes take effect in June. However, a shift towards interest rate cuts will likely be necessary to stimulate the market further. For now, poor affordability appears to be keeping many buyers on the sidelines.
Wrapping-Up
April's real estate market in Toronto and across Canada presented a mixed bag. The significant increase in new listings has helped ease the supply-demand pressure, bringing inventory levels back to pre-pandemic norms. However, sales activity remains subdued due to affordability issues and cautious buyer behavior, likely influenced by anticipated interest rate cuts. While home prices have stabilized, the market's future hinges on economic conditions and policy changes. As we move forward, monitoring these factors will be crucial in understanding and navigating the evolving real estate landscape.
Thank you!
At Evolved Realty, we commit to providing you with expert, data-driven advice to navigate these evolving market conditions. Whether you're looking to buy, sell, or simply explore your options, now is an opportune time to consider your next steps in the GTA real estate market.
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