GTA Home Sales Drop in December, ending ‘Transitional’ 2024. What to expect in 2025?

GTA home sales fell slightly last month, ending a “transitional” year in which buyers had an overwhelming advantage over sellers.

The Toronto Regional Real Estate Board (TRREB) reported that 3,359 homes were sold in the GTA in December, down 1.8 per cent from 3,419 in the same month last year.

The average sales price fell 1.6 per cent from a year ago to $1,067,186, while the composite base price, which is meant to represent the typical home, rose less than one per cent year-over-year.

There were 4,681 new homes and condos listed for sale in the GTA last month, up 20.2 per cent from a year earlier.

In Toronto itself, there were 1,174 sales in December, down 6.7 per cent from a year earlier. In the rest of the GTA, home sales rose 1.1 per cent to 2,185.

Semi-detached and detached home sales fell 9.3 per cent and 5.8 per cent, respectively, while 5.8 per cent more townhouses and 2.3 per cent more condos changed hands.

TRREB called 2024 a “transition” year for the region’s housing market, as sales rose 2.6 per cent to 67,610, lagging behind a 16.4 per cent rise in new listings to 166,121.

TRREB President Elechia Barry-Sproule said borrowing costs were the main concern for buyers in 2024. “High interest rates have created significant affordability headwinds and kept home sales well below normal,” Barry-Sproule said in a news release.

“The housing market has benefited from significant rate cuts from the Bank of Canada in the second half of the year, including two recent major rate cuts in quick succession. All else being equal, further rate cuts in 2025 and home prices remaining below historical peaks should lead to improving market conditions over the next 12 months.”

TRREB said the imbalance of new supply and sales levels has given buyers “significant choice” in the market and effectively prevented widespread price increases.

The median sales price of all home types combined was $1,117,600 in 2024, down one per cent from 2023.

Market conditions were tougher for landed homes, with TRREB noting an increase in detached home sales. Meanwhile, condo sales were down, with that sector seeing “more notable” price declines.

Real estate watchers in the region said the combination of high interest rates and a surge in new condos coming to market last year has created a supply glut that will take time to clear.

Although affordability remains a major concern for potential homebuyers, said TRREB chief market analyst Jason Mercer. He noted that the Bank of Canada’s recent interest rate cuts helped ease financial pressure and spurred activity toward the end of last year.

“Many potential first-time buyers have been on the sidelines, waiting for more interest rate cuts in 2025,” Mercer said.

“Our survey shows there are buyers who are looking to buy a home in 2025, but they need to see if a 1% or even 1.5% cut is possible before they pull the trigger.”

“The lack of first-time buyers has had a greater impact on the lower-priced condo segment than the house segment.” Mercer added that while the supply of condos for sale in the GTA is growing, conditions in the traditionally sought-after single-family home segment of the market remain “tighter,” with fewer properties available.

He also said that while the federal and Ontario governments have made efforts in recent years to remove barriers for developers to build more homes in the GTA faster, “it’s important not to slow down.”

However, the sluggish housing market could see another uptick in 2025, according to one of Bay Street’s most prominent economists.

Douglas Porter, chief economist at the Bank of Montreal, predicts that 2025 will be the year home prices start to rise after three long years of stagnation or even decline.

After a long lull, Porter notes, home sales have clearly picked up in response to the Bank of Canada’s aggressive rate cuts, while the flurry of new listings has begun to subside. “As night follows day, this more competitive market points to a rebound in price growth next year, even without the strong support of strong population growth,” Porter said in a note to clients. He added that even with a price recovery, affordability could continue to improve as strong population pressures ease and mortgage costs continue to decline.