Posted on
April 18, 2024
by
Brian Elder
A lot has happened in the real estate market over the past few weeks, and the changes keep coming.
In April, not only did the Bank of Canada hold rates steady again, it indicated that an interest rate reduction was in the future cards. It will likely only be .25% when it happens – perhaps as early as June – but it would easily be enough to spur some people into action.
The federal government also released a budget and announced that starting on August 1, first-time homebuyers will be able to use up to $60,000 of their RRSPs for a downpayment (up from $35,000) and lenders will be able to offer them a 30 year amortization term as opposed to 25 years.
Will this have a major impact on the market? Probably not. The difference between monthly payments would be less than $250 on a $500,000 mortgage. However, it will help some first-time buyers enter the market, and that is definitely a good thing. Click here for more
As for the market itself? March saw more of the same kinds of activity we’ve seen this year so far. We continue to see an abundance of new listings coming out and not as many sales. I rack this up to as potential buyers (investors and end users) wait for interest rates to drop. We’re definitely seeing this in the condo market more than the single-family home market.
In actual numbers:
In C08 (Yonge east to the Don Valley, Bloor to the Waterfront), there were 417 new listings in March and 128 sales, which is roughly only about 30%.
In C01 (Yonge west to the Dufferin rail tracks, Bloor to the Waterfront), the numbers were slightly higher – 757 listings with 256 sales, which means roughly 1/3 of the listings sold.
That may seem low, but even in the hottest market you’re lucky to see 60% of the homes listed actually sell. The number of properties being listed is lower than what’s being reported. I’m seeing listings being re-listed and refreshed, which skews the numbers. (Each time a property is re-listed, it counts as a new listing.)
What’s to come this spring?
I believe we’ll see a continued trend of more properties coming out on the market and fewer sales across the board. In specific sectors, we’ll see a higher percentage of single family homes selling, compared to condos.
Until interest rates come down, there won’t be a substantial change in activity levels even with the changes in the Federal budget.
I always like to highlight opportunities in the market. While it’s never good karma to take advantage of someone’s circumstances, there are deals to be had on condos. Some (though not many) sellers have to sell. There are definitely units that have been on the market for a while and are not getting traffic. When an offer comes along, the sellers are thankful to see it. It’s not desperation - people are just generally ready to negotiate because they want to get their property sold, especially if it has been on the market for so long.
I know buyers are waiting for interest rates to go down, but I don’t think it’s sunk in for buyers that this interest rate climate is probably the new normal for a while to come. We’re unlikely to see rates as low as they were in 2020 any time soon.
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