Toronto & Vancouver: Navigating Canada's Real Estate Giants in 2024
As we venture into 2024, the real estate landscapes of Toronto and Vancouver continue to be focal points of interest for investors, homeowners, and prospective buyers alike. Each city presents its unique set of challenges and opportunities, shaped by a mix of economic factors, market dynamics, and policy interventions.
Toronto:
Toronto's real estate market has shown signs of competitive tension early in 2024, with a slight upturn in average home prices to $1,050,359, a modest increase from the previous year. This adjustment in pricing has not deterred sales activity, which has picked up notably, pointing towards a market tightening as demand begins to outstrip supply.
Home sales in the Greater Toronto Area (GTA) have been forecasted to surge by 17% in 2024, indicating a palpable rebound as market conditions tighten through the year. Supply issues persist, with active listings increasing by 30% to 5,579 homes in March compared to last year, yet inventory levels dipping to 2.4 months. Condominiums, in particular, have seen a notable increase in activity, with sales rising by 41% year-over-year in January.
TRREB Chief Market Analyst Jason Mercer recently stated that price growth is expected to accelerate during the spring and even more so in the second half of the year, as sales growth catches up with listings growth. Lower borrowing costs in the months ahead will further help fuel increased demand for ownership housing.
The availability and cost of housing continues to be a hot topic amongst political channels. With continued population growth and a limited number of new home sales, we will see a very limited supply of available homes in the foreseeable future. The sale of new homes continues to play a key role in providing the necessary supply for the future, if new homes and condos are not selling today they will not be built or ready for the future. The opportunity is now as developers are offering discounted pricing and aggressive promotions to encourage buyers and investors to purchase new product. With a limited supply of homes in the future, housing supply will continue to remain limited with prices continuing to rise.
Vancouver:
Historical trends and ongoing economic conditions suggest that Vancouver's market continues to be influenced by high demand, especially in desirable areas close to city centres and amenities. Like Toronto, Vancouver has grappled with affordability issues, driven by a mix of limited supply, robust demand, and significant interest from both domestic and international buyers.
Vancouver saw prices increase by 4.1% over last year to $1,318,687. Sales transactions on the other hand dipped by 4.7% to 2,415 units when compared with 2023. New listings saw a bump of 16% annually but is still down 10% when compared with the long-term average for this time of year.
Like Toronto, the Vancouver City Council allowed building multiplexes of up to 6 strata units or up to 8 rental units on larger lots formerly limited to single-family houses. More importantly, the BC government has passed legislation which will force municipalities to allow (at least) a secondary suit on each lot.
The hope is that these measures will increase supply constraints to help flatten prices and increase affordability.
Navigating the Giants
For both Toronto and Vancouver, several key factors will play critical roles in shaping the real estate market in 2024:
Interest Rates: The Bank of Canada's policy decisions on interest rates will significantly impact borrowing costs, influencing both buyer affordability and investor returns.
Supply and Demand: In both cities, the supply of new listings versus the demand from buyers will continue to drive market dynamics, affecting everything from pricing trends to the speed of sales.
Government Policies: Regulatory measures, including those addressing foreign investment, housing affordability, and rental market protections, will further influence market conditions.
Economic Indicators: Broader economic conditions, including employment rates, population growth, and GDP trends, will also play a role in determining the health and direction of the real estate market.
Conclusion
As 2024 unfolds, stakeholders in Toronto and Vancouver's real estate markets must stay informed and agile. The dynamics at play are complex, influenced by a mix of local and national factors. Whether you're looking to buy, sell, or invest, understanding these nuances will be key to navigating Canada's real estate giants successfully. Regardless of where you choose to invest, both of these giants have historically performed well.