The Greater Toronto real estate market had a tough year, and it seemed to end on an even gloomier note. Altus Group data revealed that in December, GTA developers witnessed a further decline in demand, despite new home buyer incentives being introduced to boost sales. This led to the accumulation of the highest year-end inventory in almost a decade, which was nearly 2.5 times more than what was available in the tight market of 2021. However, this was not the only concerning aspect.
- Toronto New Home Sales Were The Weakest Since 1990
- Greater Toronto saw a significant decrease in total annual new home sales in 2024.
- The total number of new homes sold in the GTA last year was just 9,816, marking a 47.3% decrease from the previous year and a whopping 69% below the 10-year average.
- This sales figure was the lowest since 1990 when the region experienced a real estate downturn following a bubble.
Despite the weak sales, the Greater Toronto area was not facing a shortage of inventory by any means. Developers had a substantial 21,787 homes for sale in December, representing a 7.5% increase from the previous year. This inventory level was a remarkable 144% jump from the tight market conditions of 2021 and was the highest supply seen since 2015.
- Will Toronto New Home Prices Require Further Price Drops?
- Despite the declining sales numbers, new home prices in Greater Toronto have shown some resilience.
- The price of a benchmark single-family home dropped to $1.55 million in December, reflecting a 3.4% decrease from the previous year and a significant 16.5% decline from the record high seen in 2022.
- Condo prices, on the other hand, have been slower to adjust despite being the weakest market segment. The benchmark condo price fell to $1,018,000 in December, down 2.8% from the previous year and nearly 18.7% lower than the peak in 2022.
In conclusion, Greater Toronto real estate developers are facing unprecedented challenges, with the market witnessing the highest inventory levels in almost a decade and the weakest sales since the real estate crash of 1990. Prices have seen some adjustment, but considering the market conditions, further declines might be necessary.
The current situation is a blend of policymakers trying to manipulate market dynamics and the belief that prices cannot drop further. Policy decisions are being made to stimulate housing demand, despite warnings from the central bank. It’s been more than 30 years since the last significant housing downturn, leaving a generation unfamiliar with large corrections. This misconception that such events belong to past generations can be costly.
It’s essential to remember that market efficiency is not guaranteed, and every generation may face challenges that were once thought to be part of history. It’s crucial to be prepared for all possibilities in the dynamic world of real estate.
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