In January 2024, we witnessed a notable uptick in home sales compared to the same period in 2023. This increase can be attributed to several factors, including the allure of lower borrowing costs associated with fixed-rate mortgage products. Additionally, there was an increase in new listings year-over-year, albeit at a slightly lesser rate compared to sales. This imbalance between supply and demand has resulted in tighter market conditions, setting the stage for potential price growth as we head into the spring market.
TRREB President Jennifer Pearce emphasizes the positive start to 2024, highlighting the Bank of Canada's anticipation of receding inflation rates throughout the year. This forecast bodes well for prospective homebuyers, as lower inflation typically translates to lower interest rates. For first-time buyers, especially those grappling with high average rents, the prospect of reduced mortgage rates could make homeownership a more attainable goal.
Looking ahead, TRREB Chief Market Analyst Jason Mercer forecasts a further surge in home sales once the Bank of Canada begins cutting its policy rate, likely in the latter half of 2024. With heightened demand and limited supply, buyers can expect increased competition in the market, potentially driving selling prices upward over the next couple of years.
However, amidst the optimism, TRREB CEO John DiMichele underscores the importance of addressing lingering policy issues. At the federal level, there's a call for reflection on the Office of the Superintendent of Financial Institution (OSFI) mortgage stress test, particularly regarding its application at different stages of the interest rate cycle. Meanwhile, the focus at the provincial level remains on the imperative task of building 1.5 million new homes to alleviate housing market pressures.
As we navigate through 2024, it's clear that while there are promising signs of recovery and growth in the Toronto real estate market, there are also pertinent challenges and considerations that demand attention. Stay tuned for further updates as we continue to monitor and analyze the evolving dynamics of the housing landscape.
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