Home sales were up in January 2024 in comparison to January 2023. This annual increase came as some homebuyers started to benefit from lower borrowing costs associated with fixed-rate mortgage products.
New listings were also up year-over-year but at a lesser annual rate compared to sales. The resulting tighter market conditions for buyers when compared to the same period a year earlier, potentially point toward renewed price growth as we move into the spring market.
It is highly expected & predicted that the Bank of Canada might start cutting rates in the summer of 2024. There will be more competition between buyers in 2024 as demand picks up and the supply of listings remains constrained. The result will be upward pressure on selling prices over the next two years.
KEY POINTS & MY ANALYSIS:
1. Freehold properties in the Greater Toronto Area, Barrie, Kitchener-Waterloo region under $1 million have the highest competition as the majority of first-time home buyers have a 5-10% down payment.
2. The condo market in Downtown Toronto is still strong in terms of prices. Apartments with 2 beds, 2 baths, and 1 parking space are still over $800,000 in good & newer buildings.
3. Almost every first-time home buyer wants rental income from the basement to offset their mortgage payments. For this reason, any property with a rentable basement or the potential of a rentable basement gets multiple offers.
4. The underlisting tactic is back on the market & it is working well. Sellers are now listing their freehold properties for $100,0000 to $200,000 below market value to attract buyers looking online.
Just to give you a few examples: A few weeks ago, a semi-detached house in Mississauga received 85 offers. A bungalow with a rentable basement in Kitchener received 19 offers, and a semi-detached in Brampton received 26 offers. 2 bed 2 bath 1 parking condo apartment in South Etobicoke received 4 offers.
5. Why are prices still strong in the GTA? #1 reason is the workplace. The majority of buyers I meet daily have jobs in Downtown Toronto, especially ones in the IT & financing sector. Most employers ask their employees to come to the office at least 3 times/week. People are comfortable with a 45-minute to 1-hour drive to their workplace (that's the new norm) & that is the reason why freehold properties within a 1-hour drive of Downtown Toronto are expensive.
6. Buy what you can afford and buy from where you can travel to the workplace conveniently. I always tell my first-time home buyer clients to write down these 4 factors and decide which they want most and which they can compromise on.
a. Location
b. Type of property
c. Budget
d. Age
That's all for today. If you have any questions, or you need deeper insights into the real estate market, then give me a call at 647-676-1700.
"I never push anyone to buy or sell, neither YOU nor I can force what GOD hasn't decreed."
At the right time, you will own a house, and at the right time, you will have your return on investments. Believe.
Have a good day.
RAJVIR GREWAL, RE/MAX GOLD.
